ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Primary and secondary markets complement each other. Primary market deals with the issue of new securities. On the other hand, secondary market deals in the purchase and sale of the existing securities. That is, once the securities are issued in primary market, they are then traded in the secondary market.

Detailed explanation-2: -Both contribute to capital formation: Capital formation is an increase in the capital goods of an economy. While the primary market directly contributes to capital formation, the secondary market indirectly contributes to capital formation by providing liquidity for primary market securities.

Detailed explanation-3: -The share or securities market has two inseparable and interdependent segments known as the primary and secondary market. While the primary market is where the securities are created, it is in the secondary market where there are traded. Let’s learn more about these markets and the key differences.

Detailed explanation-4: -In a primary market, new shares and bonds are offered to the public for the first time via an initial public offering (IPO). The secondary market, on the contrary, refers to exchanges such as BSE or New York Stock Exchange or NASDAQ where stocks are traded.