ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In the primary market, new stocks and bonds are sold to the public for the first time. In a primary market, investors are able to purchase securities directly from the issuer. Types of primary market issues include an initial public offering (IPO), a private placement, a rights issue, and a preferred allotment.

Detailed explanation-2: -A subscription right is the right of existing shareholders in a company to retain an equal percentage ownership by subscribing to new stock issuances at or below market prices.

Detailed explanation-3: -The primary market is where securities are created, while the secondary market is where those securities are traded by investors. In the primary market, companies sell new stocks and bonds to the public for the first time, such as with an initial public offering (IPO).

Detailed explanation-4: -The accounting treatment of rights share is the same as that of issue of ordinary shares and is as follows: Bank a/c Dr. In case rights shares are being offered at a premium, the premium amount is credited to the securities premium account.