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Business Studies · 2026 · 3 marks
CBSE 2026 · Region 4 · Set 3 · Q24
(a) State any three points of difference between Primary Market and Secondary Market.
(a)
State any three points of difference between Primary Market and
Secondary Market.
OR
(b)
State how the following factors affect the requirements of working
capital of a company :
(i)
Seasonal factors
(ii)
Production cycle
(iii)
Inflation
Marking-scheme solution
Difference between Primary Market and Secondary Market
| S.No | Primary Market | Secondary Market |
| (i) | In primary market, there is sale of securities by new companies on further new issue of securities by existing companies to investors. | In secondary market, there is trading of existing shares only. |
| (ii) | In this market, securities are sold by the company to the investor directly (or through an intermediary). | In this market, ownership of existing securities is exchanged between investors. The company is not involved at all. |
| (iii) | The flow of funds is from savers to investors i.e., the primary market directly promotes capital formation. | This market enhances encashability (liquidity) of shares i.e, the secondary market indirectly promotes capital formation. |
| (iv) | In primary market, only buying of securities takes place, securities cannot be sold there. | In secondary market, both buying and selling of securities can take place. |
| (v) | In this market, prices are determined by the management of the company. | In this market, prices are determined by demand and supply for the security. |
| (vi) | There is no fixed geographical location. | It is located at specified places. |
investor directly
(or through exchanged between an intermediary). investors. The company is
State how the following factors affect the requirements of working
capital of a company :
(i)
Seasonal factors
(ii)
Production cycle
(iii)
Inflation
Factors affecting requirements of working capital of a company:
• (i) Seasonal factors:
Business is affected by seasonal factors as there is higher level of
activity in peak season, hence larger amount of working capital is
required and lesser amount of working capital during the lean season.
• (ii) Production cycle:
The duration as well as the length of production cycle affect the
amount of funds required for raw materials and expenses, and
consequently, the working capital requirement may be higher or
lower.
• (iii) Inflation:
During inflation, with rising prices, larger amounts of working
capital are required even to maintain a constant volume of production
and sales.
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CBSE Class 12 Business Studies past-paper question from the 2026 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.