IPO Quiz 2 – What is Grey Market Premium (GMP) in IPO? Welcome to your IPO Knowledge Test 2: Understanding Grey Market Premium (GMP) Grey Market Premium (GMP) indicates IPO demand before listing. This test will assess your knowledge of its role and impact. Name Email What does Grey Market Premium (GMP) represent? The official price set by stock exchanges for IPO shares The brokerage commission charged on IPO trades The interest rate applied to IPO loans The premium at which IPO shares are traded in the unofficial market before listing None Where does grey market trading take place? On NSE and BSE Through SEBI-registered brokers In an informal, unregulated network On international stock exchanges None What is the primary reason for the existence of the grey market? To help retail investors bypass brokerage fees To allow investors to trade IPO shares before official listing To provide SEBI with early pricing indicators To facilitate long-term investment strategies None Which of the following factors influence GMP? Company fundamentals, market sentiment, and peer company performance SEBI regulations and brokerage fees Government policies on taxation Fixed interest rates set by RBI None How is GMP calculated? Using a fixed mathematical formula By analyzing company financials and balance sheets Based on demand and supply in the unofficial market Through SEBI’s regulatory framework None Which of the following is a disadvantage of relying on GMP for investment decisions? It is an officially regulated metric It guarantees high listing gains It is speculative and unregulated It always accurately predicts stock performance None What is the difference between GMP and Kostak rate? GMP is regulated by SEBI, while Kostak is an unregulated concept GMP applies to equity shares, while Kostak applies only to debt instruments GMP is applicable post-listing, while Kostak is determined after allotment GMP is an unofficial IPO premium, while Kostak is the price for selling an IPO application None Which of the following is NOT a risk associated with GMP? High volatility Market manipulation Regulatory intervention by SEBI Unreliable prediction of listing gains None Why might a high GMP not always be a good indicator for investing in an IPO? It does not account for company fundamentals It guarantees long-term success It is an official metric provided by stock exchanges It ensures high brokerage fees None What should retail investors consider while using GMP as an investment tool? Treat GMP as a sole deciding factor for investment Combine GMP with research on company fundamentals Invest only in IPOs with high GMP values Avoid IPO investments altogether None Congratulations! You've completed the GMP MCQ Test! Thank you for participating! Understanding Grey Market Premium (GMP)helps in making informed IPO investment decisions. Keep learning and refining your strategies! Share this quiz with friends and colleagues to help them deepen their IPO knowledge. Try again for a better score or explore more financial market tests! Time's up
