Question

Book Building through the NSE system offers several advantages except _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ .

• A. The NSE system offers a nationwide bidding facility in securities
• B. Costs involved in the issue are far less than those in a normal IPO
• C. The system reduces the time taken for completion of the issue process
• D. The IPO market 24/7.

Hint:

Remember: Stock markets and IPOs have specific trading hours. They do not operate 24/7. Any option claiming 24/7 market operation is likely incorrect.

Answer 1

The Correct Option is D

Step 1: Understand the concept of Book Building.
Book Building is a process used by companies to raise capital through public offerings. It involves generating and recording investor demand for shares to determine the issue price. NSE (National Stock Exchange) provides an electronic platform for this process.

Step 2: Recall the advantages of Book Building through NSE.
The NSE book building system offers several benefits:

Nationwide reach for bidding
Cost efficiency compared to traditional IPOs
Faster completion of the issue process
Transparency in price discovery
Efficient collection and processing of bids

Step 3: Analysis of each option.

(A) The NSE system offers a nationwide bidding facility in securities: This is an advantage. NSE's electronic network allows investors across the country to participate in the bidding process.

(B) Costs involved in the issue are far less than those in a normal IPO: This is an advantage. Book building reduces marketing and administrative costs compared to traditional fixed-price IPOs.

(C) The system reduces the time taken for completion of the issue process: This is an advantage. Electronic bidding and processing accelerate the entire issue timeline.

(D) The IPO market 24/7: This is NOT an advantage. The IPO market does not operate 24/7. Trading and bidding are conducted during specific market hours on working days.

Step 4: Conclusion.
Options A, B, and C are genuine advantages of the NSE book building system. Option D is incorrect because the IPO market operates only during specified hours on business days, not 24 hours a day.

Final Answer: (D) The IPO market 24/7.