WAEC Commerce 2018 Theory — Question 6

Model answer

(a) The second-tier market can be defined as the market for buying and selling old securities which cannot be traded in the (main) stock exchange. (b) Advantages: it provides easy access to investment for investors; it saves companies advertising costs since investors can access all the information they need about the company in the market; the market serves as adviser to both investors and companies; it also ensures the survival and development of companies without fear of liquidation in the short-run. (c) Requirements: the company must be incorporated as a public limited company; it must have not less than 100 shareholders; the public must subscribe to at least 10% of the company's equity share; the company must submit three years' financial statement; the company must sign an undertaking with the stock exchange.