Question -
Answer -
a. The above case shows the primary market. It is the market where securities are being issued for the first time.
b. The method of floatation that is applied is right issue of shares. It is a type of privilege that existing shareholders get at the time of issue of new shares as per the terms and conditions of the company.
c. Two other methods of floatation are:
i. Offer for Sale: In this method securities are issued to the intermediaries such as stock brokers or issue house instead of issuing to the public directly. In this example securities are sold to brokers at an agreed price who will be selling those shares to the public.
ii. Offer through prospectus: It is one of the most popular method of raising funds by public companies in the share market or the primary market. It involves issuing of prospectus through inviting of subscriptions. It makes an appeal to raise investment by publishing of ads in magazines and newspapers. The contents of the prospectus should be in accordance with the Companies Act, investor protection guidelines and SEBI disclosure.