Shriniwas has 2,500 equity shares of K.C.L. company. He wants to sell these shares. Identify the market which he should approach.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Secondary market
Option (1) New issue market — Incorrect. The new issue (primary) market deals with new securities issued for the first time. Shriniwas already holds the shares, so he is not buying new securities.
Option (2) Money market — Incorrect. The money market deals in short-term funds and short-term debt instruments, not in equity shares.
Option (3) Secondary market — Correct. The secondary market (stock exchange) is the market for the purchase and sale of existing securities. Shriniwas wants to sell shares he already holds, so he should go here.
Option (4) Capital market — Incorrect. The capital market is the wide market for long-term funds. It includes both the new issue market and the secondary market, so it does not name the market where existing shares are sold.
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): “SECONDARY MARKET The secondary market is also known as the stock market or stock exchange. It is a market for the purchase and sale of existing securities. It helps existing investors to disinvest and fresh investors to enter the market. It also provides liquidity and marketability to existing securities. …” |