The methods of floatation of new issues in primary market doesn't include:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Sweat issue
Option (1) Private placement — A method of floatation (Incorrect). The company sells the securities to a few selected institutional investors, which saves the cost of a public issue.
Option (2) Rights issue — A method of floatation (Incorrect). New shares are first offered to the existing shareholders, in proportion to the shares they already hold.
Option (3) Sweat issue — Not a method of floatation (Correct). The methods of floating a new issue in the primary market are offer through prospectus, offer for sale, private placement, rights issue and e-IPOs. Sweat issue is not among them.
Option (4) Offer through prospectus — A method of floatation (Incorrect). It is the most popular method: the company invites the public to buy its securities through a prospectus.
Note: Although the chapter ‘Financial Markets’ was dropped from the NCERT textbooks during rationalisation, it has stayed in the NTA syllabus every year since 2022, except for 2025, and it is part of the syllabus again from 2026. This question is therefore based on the pre-rationalised NCERT, an extract from which is given below.
NCERT (Pre-rationalised Edition):
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