Question

Bhuvan got a chance to buy shares in the ratio of $1:1$ from ABC company. What is this type of issue called? Explain any other two ways of issue share under primary market.

Answer 1

It is a type of Right Issue.Securities are issued to existing investors by offering them to buy more securities at a pre-determined price (rights)

2 types of issue under primary market are:

1. Public issue: Securities are issued to the all the members of the public who are eligible to participate in the issue.

2. Private placement: The sale of securities to a relatively small number of select investors as a way of raising capital. This is a wholesale issue of securities to institutional investors by an unlisted company.