[amp_mcq option1=”3 only” option2=”2 and 3 only” option3=”1 and 3 only” option4=”1, 2 and 3″ correct=”option3″]
The correct answer is: C. 1 and 3 only
Primary markets are where new securities are issued and sold to investors for the first time. Secondary markets are where existing securities are bought and sold between investors.
Primary markets help in capital formation, while secondary capital provides liquidity to the investor.
Initial public offerings (IPOs) are always undertaken in primary markets.
Stock exchanges are an example of secondary markets.
Here is a more detailed explanation of each option:
- Option 1: Primary markets help in capital formation, while secondary capital provides liquidity to the investor.
This is correct. Primary markets help companies raise money by selling new shares to investors. Secondary markets allow investors to buy and sell shares of companies that have already been issued.
- Option 2: Initial public offerings are undertaken in both primary and secondary markets.
This is incorrect. Initial public offerings (IPOs) are always undertaken in primary markets. IPOs are the first time that shares of a company are offered to the public.
- Option 3: Stock exchanges are an example of secondary markets.
This is correct. Stock exchanges are where investors can buy and sell shares of companies. Stock exchanges are an example of secondary markets because they allow investors to buy and sell shares of companies that have already been issued.
I hope this explanation is helpful!