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What is the primary function of the new issue market?
- a)To facilitate the trading of existing securities.
- b)To promote savings and investments in new corporate enterprises.
- c)To regulate the flow of funds between investors and intermediaries.
- d)To provide short-term loans to businesses for expansion.
Correct answer is option 'B'. Can you explain this answer?
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What is the primary function of the new issue market?a)To facilitate t...
The primary function of the new issue market, also known as the primary market, is to promote savings and investments in new corporate enterprises or the expansion, diversification, growth, or modernization of existing ones. This market facilitates the transfer of funds from investors to entrepreneurs who are setting up new businesses or seeking to enhance their existing ones. It plays a crucial role in channeling savings into long-term investments, contributing to the economic growth and industrial development of a country.
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What is the primary function of the new issue market?a)To facilitate t...
Primary Function of the New Issue Market:
The primary function of the new issue market is to promote savings and investments in new corporate enterprises. This market plays a crucial role in facilitating the growth and expansion of businesses by providing them with access to capital through the issuance of new securities.
Key Points:
- Raising Capital: One of the main functions of the new issue market is to help companies raise capital by issuing new securities such as shares, debentures, and bonds. This capital is essential for businesses to finance their operations, expand their activities, or undertake new projects.
- Promoting Investments: By offering new securities to the public, the new issue market encourages individuals and institutions to invest their savings in these securities. This not only benefits the companies raising capital but also provides investors with an opportunity to earn returns on their investments.
- Economic Growth: The new issue market plays a significant role in driving economic growth by channeling funds from savers to productive investments. This capital infusion helps create employment opportunities, stimulate innovation, and contribute to overall economic development.
- Diversification: The new issue market allows investors to diversify their investment portfolios by providing them with access to a range of new investment opportunities. This diversification helps reduce investment risk and can lead to better long-term financial outcomes for investors.
In conclusion, the new issue market serves as a vital platform for companies to raise capital, promotes investment opportunities for individuals and institutions, contributes to economic growth, and facilitates diversification of investment portfolios.
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What is the primary function of the new issue market?a)To facilitate the trading of existing securities.b)To promote savings and investments in new corporate enterprises.c)To regulate the flow of funds between investors and intermediaries.d)To provide short-term loans to businesses for expansion.Correct answer is option 'B'. Can you explain this answer?
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What is the primary function of the new issue market?a)To facilitate the trading of existing securities.b)To promote savings and investments in new corporate enterprises.c)To regulate the flow of funds between investors and intermediaries.d)To provide short-term loans to businesses for expansion.Correct answer is option 'B'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about What is the primary function of the new issue market?a)To facilitate the trading of existing securities.b)To promote savings and investments in new corporate enterprises.c)To regulate the flow of funds between investors and intermediaries.d)To provide short-term loans to businesses for expansion.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for What is the primary function of the new issue market?a)To facilitate the trading of existing securities.b)To promote savings and investments in new corporate enterprises.c)To regulate the flow of funds between investors and intermediaries.d)To provide short-term loans to businesses for expansion.Correct answer is option 'B'. Can you explain this answer?.
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