CMFAS CM-EIP Equities & Shares question: company itself raise

CMFAS CM-EIPEquities & Shares

In which market does a company itself raise new capital by first issuing shares to the public?

A The secondary market, where investors trade existing shares with one another
B The primary market, typically through an Initial Public Offering (IPO)
C The over-the-counter derivatives market run by dealers
D The interbank money market used by banks and MAS

Show the answer and explanation

Answer: B. The primary market, typically through an Initial Public Offering (IPO)

Shares are first issued to the public in the primary market (e.g. an IPO) where the company raises new capital; thereafter they trade among investors in the secondary market, where the company receives no further proceeds.

Common mistake

Swapping primary (new issuance) with secondary (investor-to-investor trading).

Practise more CM-EIP Equities & Shares questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practising →

Study note: Equities & Shares CMFAS CM-EIPpractice questions & mock exams

CMFAS CM-EIP Equities & Shares question: company itself raise

Answer: B. The primary market, typically through an Initial Public Offering (IPO)

Common mistake

Related CMFAS CM-EIP questions

CMFAS CM-EIP Equities & Shares question: company itself raise

Answer: B. The primary market, typically through an Initial Public Offering (IPO)

Common mistake

Related CMFAS CM-EIP questions