Unit study guide · NISM Series XV
Introduction to Securities Market
3 questions in this unit
What this unit covers
Key ideas
From the practice bank · 1
Which transaction occurs in the primary market?
The primary market is where securities are issued to investors by the issuer or through an issuance process. Trading of already-issued securities between investors occurs in the secondary market. Remember: Primary markets create or place securities. Secondary markets facilitate trading after issuance.
Hint Common mistake: Equating any exchange-related transaction with a primary-market transaction.
XV-065From the practice bank · 2
In the dematerialised securities system, a Depository Participant (DP) primarily acts as:
A Depository Participant is an intermediary through which investors access services of a depository, such as holding and transferring securities in dematerialised form. The issuer, central bank and credit-rating agency perform different functions. Remember: Know the distinct roles of market infrastructure institutions and intermediaries.
Hint Common mistake: Confusing a depository with a depository participant or with the issuer.
XV-066From the practice bank · 3
Which statement correctly distinguishes a standard futures contract from an option for the buyer?
A futures contract creates reciprocal contractual obligations subject to the contract and settlement mechanism. An option buyer purchases a right, not an obligation, while the option writer assumes the corresponding obligation if exercised or assigned according to the contract. Remember: Futures are obligation-based contracts. Options give the buyer a contractual right.
Hint Common mistake: Remembering only that both are derivatives and overlooking the different payoff obligations.
XV-067