In the primary market, what determines and decides the prices of securities?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → The management of the company
Option (1) The management of the company — Correct. In the primary market, the company sells its new securities itself. So its management decides the price.
Option (2) The forces of demand and supply for the security — Incorrect. Demand and supply set prices in the secondary market, where investors trade existing shares.
Option (3) The stock exchange on which the security is listed — Incorrect. The stock exchange is the secondary market. Prices there come from demand and supply for shares already issued.
Option (4) The Securities and Exchange Board of India — Incorrect. SEBI is the regulator of the securities market. Its job is to protect investors and regulate the market.
NCERT (Pre-rationalised Edition):
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