Question

What is the primary role of the secondary market in terms of capital formation for companies?

a.

Directly provides additional capital to companies

b.

Indirectly contributes to capital raising by providing liquidity

c.

Blocks investment for a long period

d.

Only allows investment through IPOs

Answer: (b).Indirectly contributes to capital raising by providing liquidity Explanation:The secondary market indirectly contributes to capital raising by providing liquidity and marketability to securities.

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Q. What is the primary role of the secondary market in terms of capital formation for companies?

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