Class 12 Finance Important Chapter 10 New Issue Market (NIM) or Primary Market Solutions English Medium As Per The New Syllabus to each chapter is provided in the list so that you can easily browse through different chapters ASSEB Class 12 Finance Important Solutions in English and select need one. AHSEC Class 12 Finance Additional Notes Download PDF. HS 2nd Year Banking Additional Solutions.
Class 12 Finance Important Chapter 10 New Issue Market (NIM) or Primary Market
Also, you can read the NCERT book online in these sections Solutions by Expert Teachers as per Central Board of Secondary Education (CBSE) Book guidelines. ASSEB Class 12 Banking Additional Question Answer are part of All Subject Solutions. Here we have given HS 2nd Year Finance Important Solutions English Medium for All Chapters, You can practice these here.
New Issue Market (NIM) or Primary Market
Chapter: 10
| IMPORTANT QUESTION AND ANSWER |
Short Questions and Answers:
1. What is the New Issue Market (NIM) or Primary Market?
Ans: The New Issue Market or Primary Market is where new securities are issued and sold to the public for the first time. It helps companies, both new and existing, raise capital for setting up new ventures or expanding their businesses.
2. Who are the users and savers of funds in the NIM?
Ans: Savers are individuals, commercial banks, and insurance companies. Users of funds are public limited companies and the government, who require funds for business activities and public projects.
3. What is underwriting in the context of the New Issue Market?
Ans: Underwriting is a process where underwriters guarantee to buy shares if the public doesn’t subscribe to all of them. This ensures the success of the new issue and protects the issuing company.
4. What is origination in the New Issue Market?
Ans: Origination is the investigation, analysis, and processing of new project proposals. It ensures technical, economic, financial, and legal soundness before issuing new securities.
5. What is a public issue in the New Issue Market?
Ans: In a public issue, a company directly offers shares to the general public through a prospectus, inviting them to subscribe to a fixed number of shares at a stated price.
6. What is a private placement?
Ans: Private placement involves selling securities directly to selected investors or institutions, usually through brokers or issue houses, without offering them to the general public.
7. What does a right issue mean?
Ans: A right issue is when a company offers its existing shareholders the right to buy additional shares at a privileged price within a specified period, based on their current shareholding.
8. Name any three intermediaries in the New Issue Market.
Ans: Three intermediaries in the New Issue Market are merchant bankers, underwriters, and brokers.
9. What is the difference between the Primary Market and the Secondary Market?
Ans: The Primary Market (New Issue Market) is where new securities are issued and sold to investors for the first time, enabling companies to raise fresh capital. In contrast, the Secondary Market is where existing securities are bought and sold among investors, providing liquidity and market value to those securities. The Primary Market raises funds for issuers, while the Secondary Market enables trading of already issued securities.
10. Why are merchant bankers important in the NIM?
Ans: Merchant bankers manage the entire process of new issue management, from origination and underwriting to pre-issue and post-issue services, ensuring the smooth flow of funds and compliance.
Fill in the Blanks:
1. The New Issue Market is also known as the __________ market.
Ans: Primary.
2. The process of investigating, analyzing, and processing new project proposals is called __________.
Ans: Origination.
3. __________ provide a guarantee for the success of an issue by agreeing to buy unsold shares.
Ans: Underwriters.
4. The sale of securities to ultimate investors is called __________.
Ans: Distribution.
5. A company offers shares directly to the public through a __________.
Ans: Prospectus.
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