CBSE BoardEnglish MediumSTD 12 CommerceEntrepreneurshipResource Mobilization3 Marks
Question
How do primary and secondary markets promote capital formation?
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Answer
In the primary market the flow of funds is from savers to investors, that directly promotes capital formation. At the same time secondary market enhances the marketability of securities and thereby provides liquidity to investments. It indirectly promotes capital formation.
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