The following is not a method of flotation:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Open Market Operation
A method of floatation is a way in which a company offers new securities in the primary market to raise funds. There are five: offer through prospectus, offer for sale, private placement, rights issue and e-IPOs.
Option (1) Offer through Prospectus — A method of floatation (Incorrect). The company invites the public to buy its securities through a prospectus. It is the most popular method.
Option (2) Private Placement — A method of floatation (Incorrect). Securities are allotted to institutional investors and some selected individuals, without a public issue.
Option (3) Open Market Operation — Not a method of floatation (Correct). It is a tool of the Reserve Bank of India, which buys and sells government securities to control the money supply. No company raises capital through it.
Option (4) Rights Issue — A method of floatation (Incorrect). Existing shareholders get the right to buy new shares in proportion to the shares they already hold.
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. This chapter is missing from the new book, yet it gave five questions in this paper. That is 25 marks from a few pages of the pre-rationalised NCERT. NCERT (Pre-rationalised Edition):
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