Define new issue market, explain any two methods of flotation in this type of market.
Answers
Answer:
(i) Offer Through Prospectus: It is the method of floating new issues by inviting subscriptions from the public through issue of prospectus. (ii) Offer for Sale: It is the method in which the securities are not issued directly to the public but through intermediaries like issuing houses or stock brokers.
Answer:
Public Issue: Under this method, the company issues a prospectus and invites the general public to purchase shares or debentures.
(ii) Offer for Sale: Under this method, firstly the new securities are offered to an intermediary (generally firms of stock brokers) at a fixed price. They further resell the same to the general public at a higher price. The advantage of doing this is that the issuing company feels free from the tedious work of making a public issue .
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