Difference Between Primary Market and Secondary Market
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Questions and Answers

What is the key factor that determines the prices of securities in the primary market?

  • Company management decisions (correct)
  • Annual financial performance of the company
  • Market sentiment towards the company
  • Demand and supply of the securities
  • In which market do investors exchange ownership of securities?

  • Primary market
  • Tertiary market
  • Quaternary market
  • Secondary market (correct)
  • What is the main function of a stock exchange in relation to existing securities?

  • Directly selling existing securities to investors
  • Determining the prices of existing securities
  • Providing liquidity and marketability to existing securities (correct)
  • Deciding the geographical location of existing securities
  • What is the role of a stock exchange in contributing to economic growth?

    <p>Ensuring that savings are channeled to productive investment avenues</p> Signup and view all the answers

    Which market facilitates both buying and selling of securities?

    <p>Secondary market</p> Signup and view all the answers

    What is the purpose of selecting a broker before trading on a Stock Exchange?

    <p>To comply with the stock exchange regulations</p> Signup and view all the answers

    What is the role of the broker in executing the order of an investor?

    <p>Executing the order based on the investor's instructions</p> Signup and view all the answers

    What is the primary difference between Capital Market and Money Market instruments?

    <p>Capital market instruments are less liquid than money market instruments</p> Signup and view all the answers

    What is the purpose of de materialisation of securities?

    <p>To facilitate trading in electronic form and eliminate problems like theft and forgery</p> Signup and view all the answers

    What is the main objective of depository services system and D-Mat Account?

    <p>To simplify and secure the process of trading shares in electronic form</p> Signup and view all the answers

    In the Primary Market, existing securities are traded.

    <p>False</p> Signup and view all the answers

    The price of securities in the Secondary Market is determined by the management of the company.

    <p>False</p> Signup and view all the answers

    Investors exchange ownership of securities directly with the company in the Secondary Market.

    <p>False</p> Signup and view all the answers

    The primary function of a Stock Exchange is to provide liquidity and marketability to new securities in the Primary Market.

    <p>False</p> Signup and view all the answers

    Both buying and selling of securities can take place in the Primary Market.

    <p>False</p> Signup and view all the answers

    The process of de materialisation of securities aims to introduce a physical form of trading in shares.

    <p>False</p> Signup and view all the answers

    Money market instruments are generally less liquid compared to capital market securities.

    <p>False</p> Signup and view all the answers

    The settlement of transactions on a stock exchange occurs only on a cash basis, not on a carry-over basis.

    <p>False</p> Signup and view all the answers

    The main objective of depository services system and D-Mat Account is to increase the difficulties in transferring shares in physical form.

    <p>False</p> Signup and view all the answers

    The primary difference between Capital Market and Money Market instruments lies in the participants involved.

    <p>True</p> Signup and view all the answers

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