Question

What is meant by primary market? Explain any two methods of floating new issues in the primary market.​

Answer 1

Answer:

Primary market is a market in which new securities are issued for the first time to the investors. The methods of floating new issues in the primary market are: (i) Offer Through Prospectus: It is the method of floating new issues by inviting subscriptions from the public through issue of prospectus.

The methods of floating new issues in the primary market are:

(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.

(iii) Private Placement: It refers to the allotment of securities by a company to institutional investors and some selected individuals.

(iv) Rights Issue: It is the privilege given to existing shareholders to subscribe to new issue of shares in proportion to the number of shares they already hold.

(v) e-IPO: It refers to issuing securities through the online system of stock exchange.