1.
contemporary financial management What are the differences between the primary and
secondary markets?
Solution
The difference between the primary capital market and the secondary capital market is that in the
primary market, investors buy securities directly from the company issuing them, while in the
secondary market, investors trade securities among themselves, and the company with the
security being traded does not participate in the transaction.
BASIS FOR
COMPARISON
PRIMARY MARKET SECONDARY MARKET
Meaning
The place where fresh issue of
shares is made is known as
primary market.
The place where formerly issued
securities are traded is known as
Secondary Market.
Another Name New Issue Marrket (NIM) After Market
Type of Purchasing Direct Indirect
How many a security can
be sold?
Only once Multiple times
Buying and Selling
between
Company and Investors Investors
Who will gain the amount
on the gain of shares?
Company Investors
Intermediary Underwriters Brokers
Price FIxed Price
Fluctuates, depends on the demand
and supply force