Financial Awareness - Risk, Stability & Emerging Finance
Which of the following statements about the pricing of securities in the Primary and Secondary Markets is CORRECT?
Which of the following statements about the pricing of securities in the Primary and Secondary Markets is CORRECT?
medium Q8 of 15
Step-by-Step Solution
Step 1: Understand pricing mechanisms
In the Primary Market, the issuing company (with underwriters) fixes the issue price. In the Secondary Market, prices fluctuate based on demand and supply among investors.Step 2: Analyze options
Demand-supply determines prices only in Secondary Market. Government and stock exchanges do not fix prices directly.Final Answer:
In the Primary Market, prices are fixed by the issuing company; in the Secondary Market, prices fluctuate based on demand and supply → Option BQuick Check:
Primary Market price = fixed; Secondary Market price = demand-supply ✅
Quick Trick: Primary Market price fixed; Secondary Market price market-driven.
Common Mistakes:
- Reversing price determination roles in markets.
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