Financial Markets

Choose the Correct Answer

Correct Answer : Option c

Explanation
The description refers to a type of transaction in government securities markets called “When Issued” (WI).
Features

• A government security that is announced but not yet issued.
• Trading takes place conditionally ( “if and when issued”).
• The purpose is to lock in prices early and assess market demand.
• This system is regulated by the Reserve Bank of India (RBI).

All these features perfectly align with the definition of a “When Issued” (WI) security.
Other incorrect options are:

Option (a): A Rights Issue is when a company offers additional shares to its existing shareholders at a discounted price to raise capital.
Option (b) : Short selling involves borrowing a security (usually a stock) and selling it in the market with the expectation that its price will fall, allowing the trader to buy it back later at a lower price for profit. These are regulated by SEBI, not related to the issuance of government securities.

Option (d): Sweat Issues are equity shares issued to employees or directors at a discount or for consideration other than cash, in exchange for their services, know-how, or value addition. These are Governed by the Companies Act, 2013 and SEBI (for listed companies).