Primary Vs Secondary Market-Financial Markets| Management Notes

Primary Vs Secondary Marketcondary Market

Primary Vs Secondary Market|Securities market | Financial Markets
BBA | BBA-BI |BBS | BHCM
Management Notes

Difference between Primary and Secondary Market

Primary Market is the marketplace where companies issue securities for the first time. On the other hand, Secondary Market is the marketplace where the second-hand securities are traded so that public can buy and sell the securities. With the help of issuance of these securities the companies raises capital.  Difference between primary market and secondary market is explained below:

Difference between Primary and Secondary Market

S.No.Primary Market Secondary Market
1. Primary Market is also called New Issue Market (NIM).Secondary Market is also called After Issue Market.
2.Primary Market is the marketplace where the company issues securities for the first time also called Initial Public Offering IPO.Secondary Market is the marketplace where the second-hand securities are traded.
3.In primary market, the securities are directly issued by the companies directly to the  investors.In secondary market, the securities are sold by or transferred from one investor(Speculator) to another which allows the investors to buy securities.
4.The prices in the primary market are fixed and issued at par value.The prices in the secondary market vary depending with the demand and supply of the securities traded.
5.The intermediaries in primary market are investment bankers or Underwriters who are involved in selling of the securities.The intermediaries in secondary market are brokers who are involved in trading of the securities in the secondary market.
6.Primary Market provides financing to the new companies for their expansion and diversification.Since , secondary Market are not involved in transaction they  do not provide financing to the companies.
7. In primary market, the amount received from the securities are the income of the companies.But ,in secondary market, the amount received from the securities(stocks and bonds) are the income of the investors.
8. In case of primary market, there is no specific physical existence or location.But in case of secondary market, there is some physical existence.
9. Primary market does not help to maintain liquidity.Secondary Market helps to maintain liquidity.

Similarly, Other related posts:

You may also like:

Author: Smirti

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.