In the secondary market, sale of securities takes place between investors only, then how does this market contribute to capital formation?

Trading securities

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Capital formation

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Price determination

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None of the above

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Solution

The correct option is B
Capital formation

This market contributes to capital formation indirectly by providing liquidity through stock exchange to the securities bought in the primary market.

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Similar questions

List-I	List-II
(i) National Stock Exchange	(a) Marks the beginning of the process of dematerialisation of shares of the participating companies.
(ii) National Securities Depository Limited	(b) Facilitation of equal access to investors across the country.
(iii) Securities and Exchange Board of India	(c) To foster the development of an active secondary market for Government Securities.
(iv) Securities Trading Corporation of India	(d) Abolition of Capital issues control and retaining the sale authority for new capital issues

Which is the regulatory authority in the securities market to protect the interest of investors?

___ market directly contributes to the capital market.

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