Question : Case Study 24:
JKL Ltd. is a conglomerate planning to acquire a startup in the artificial intelligence sector to enhance its technology offerings.
Question :
To finance the acquisition of the AI startup, JKL Ltd. is considering issuing bonds. What type of market activity is this?
Option 1: Primary market
Option 2: Secondary market
Option 3: Money market trading
Option 4: Equity share issuance
Correct Answer:
Primary market
Solution : The correct answer is (a) Primary market
When JKL Ltd. considers issuing bonds to finance the acquisition of the AI startup, the type of market activity associated with this action is Primary market. In the primary market, new securities such as bonds or stocks are issued and sold for the first time, directly by the issuing company or entity to investors. JKL Ltd. would be initiating this process by offering bonds to raise capital specifically for funding the acquisition, making it a primary market activity.
