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Business Studies · 2023 · 4 marks
CBSE 2023 · Region 4 · Set 1 · Q29
‘Hitesh Ltd.’ is a well-known company in the cementindustry since 1999. The company has an authorisedcapital of Rs. $\displaystyle 100$ crore and is listed with a reputed stockexchange. The value of its shares is increasing day-by-daydue to increase in the demand for cement. Now thecompany wants to enter into car manufacturing business.For this it requires Rs. $\displaystyle 200$ crore. The Finance Manager ofthe company decides to raise this capital by a public issue.(a)Identify the market in which the company’s existingsecurities are being traded.(b)Name the market through which the company wants toraise its capital of Rs.200 crore.crore for its new business.(c)Distinguish between the markets identified in (a) and (b)above on the basis of any two points.
‘Hitesh Ltd.’ is a well-known company in the cement
industry since 1999. The company has an authorised
capital of Rs. $\displaystyle 100$ crore and is listed with a reputed stock
exchange. The value of its shares is increasing day-by-day
due to increase in the demand for cement. Now the
company wants to enter into car manufacturing business.
For this it requires Rs. $\displaystyle 200$ crore. The Finance Manager of
the company decides to raise this capital by a public issue.
(a)
Identify the market in which the company’s existing
securities are being traded.
(b)
Name the market through which the company wants to
raise its capital of Rs.200 crore.
crore for its new business.
(c)
Distinguish between the markets identified in (a) and (b)
above on the basis of any two points.
Marking-scheme solution
(a)
Secondary Market
(b)
Primary Market
Difference between Primary Market and Secondary Market
| Primary Market | Secondary Market | ||
| i | Sale of securities by new companies or new issues of securities by existing companies. | i | Trading of existing securities only. |
| ii | Securities are sold by the company to the investor directly (or through an intermediary). | ii | Ownership of existing securities is exchanged between investors. The company is not involved at all. |
| iii | Flow of funds is from savers to investors, i.e. the Primary Market directly promotes capital formation. | iii | Enhances encashability of shares, i.e. it indirectly promotes capital formation. |
| iv | Only buying of securities takes place in the Primary Market. Securities can not be sold there. | iv | Both the buying and selling of securities can take place on the stock-exchange. |
| v | Prices are decided and determined by the management of the company. | v | Prices are determined by demand and supply of the securities. |
| vi | There is no fixed geographical location. | vi | Located at specified places. |
(or through an company is not involved at intermediary). all.
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CBSE Class 12 Business Studies past-paper question from the 2023board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.