Difference between Primary and Secondary Market

 



 

Primary market

Secondary market

Definition

A primary market is a marketplace where corporations imbibe a fresh issue of shares for being contributed by the public for soliciting capital to meet their necessary long-term funds like extending the current trade or buying a unique entity.

A secondary market is a prototype of the capital market where debentures, current shares, options, bonds, treasury bills, commercial papers, etc., of the enterprises are patronised amongst the investors.

Also called as

New Issue Market (NIM)

After Issue Market (AIM)

Role of the market

Market where stocks are issued for the first time

Market where stocks are traded once issued

Intermediaries

Investment banks

Brokers

Sale of securities

Directly by companies to investors

Sold and purchased amongst investors and traders

Price of shares

Fixed at par value

Changes depending on the supply and demand of shares

To whom it provides financing

It provides financing to the existing companies for facilitating growth and expansion.

It does not provide any kind of financing.

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