ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The primary market is also known as the new issues market, which deals with new securities being issued for the first time. Primary market directly contributes in capital formation because in primary market company goes directly to investors and utilize the funds for investment purpose.

Detailed explanation-2: -A primary market means the market for new issues of securities, as distinguished from the secondary market, where previously issued securities are bought and sold.

Detailed explanation-3: -The primary market is where securities are created. It’s in this market that firms sell (float) new stocks and bonds to the public for the first time. An initial public offering, or IPO, is an example of a primary market.

Detailed explanation-4: -There are 5 types of primary market issues. Public issue is the most common method of issuing securities of a company to the public at large. It is mainly done via Initial Public Offering (IPO) resulting in companies raising funds from the capital market. These securities are listed in the stock exchanges for trading.

Detailed explanation-5: -The secondary market, also called the aftermarket and follow on public offering, is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold.