Question

A financial instrument is called a 'primary security' if it represents the liability of _________.

• A. some ultimate borrower
• B. the government of India
• C. a primary cooperative bank
• D. a commercial bank

Answer 1

The correct option is A some ultimate borrower

Instruments (certificates) issued by the ultimate borrower are called primary securities. Instruments issues by intermediates on behalf of the ultimate borrower are called indirect securities.
The market for instruments (also called securities) issued for the first time, is called the primary market.
Primary security is the asset created out of the credit facility extended to the borrower and/or which are directly associated with the business/project of the borrower for which the credit facility has been extended