A government company requires funds for a new project. What are the methods of flotation available to this company?
(A) Offer for Sale
(B) Initial Public Offer (IPO)
(C) Offer Through Prospectus
(D) Private Placement
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A), (B), (C) and (D)
A company raises fresh capital in the primary market (the new issue market), and the ways of doing it are called methods of floatation. A government company can use them like any other public company.
(A) Offer for Sale — Correct. The company sells the whole issue to issuing houses or brokers at an agreed price, and they resell the securities to the public.
(B) Initial Public Offer (IPO) — Correct. An IPO is a company’s first offer of shares to the public. The book describes its online form, e-IPOs, made through the stock exchange’s system.
(C) Offer Through Prospectus — Correct. It is the most popular method: the company invites the public to subscribe through a prospectus advertised in newspapers and magazines.
(D) Private Placement — Correct. The securities are sold to a few institutional investors, such as banks, mutual funds and insurance companies. This saves the cost of a public issue.
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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