• Ans-A
  • Because it trades like a stock, an ETF does not have its net asset value calculated everyday like an indexed mutual fund.

  • An ETF combines the valuation feature, the diversification, of a mutual fund (a mutual fund can be bought or sold at the end of each trading day for its net asset value) with the tradability feature of a stock, which trades throughout the trading day at prices that may be more or less than its net asset value.


  • Secondary Market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange.
  • Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets.
  • Following are the main financial products/instruments dealt in the secondary market:

  Equity Shares

  Rights Issue / Rights Shares
  Preferred Stock / Preference shares
  Government securities (G-Secs)
  Debentures
  Bond

  Commercial Paper

  • An initial public offering (IPO) is the first sale of stock by a private company to the public.
  • IPOs are often issued by smaller, younger companies seeking the capital to expand, but can also be done by large privately owned companies looking to become publicly traded.
  • It is part of primary market.


  • ANS-A
  • Bonds are instruments of debt that are typically used by corporates to raise money from investors.
  • Masala bonds are rupee-denominated instruments sold only to offshore investors by Indian corporates for raising money from overseas investors.
  • They do not face currency fluctuation risks.


  • ANS-B
  • Participatory notes are instruments used for making investments in the stock markets.
  • However, they are not used within the country.
  • They are used outside India for making investments in shares listed in the Indian stock market.
  • That is why they are also called offshore derivative instruments.
  • PNs are not completely banned in India, however, stringent measures have been taken by SEBI to regulate them.


  • ANS-D