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: -The primary market may also be called the New Issue Market (NIM). In the primary market, securities are directly issued by companies to investors. Securities are issued either by an Initial Public Offer (IPO) or a Further Public Offer (FPO).

Detailed explanation-3: -Primary market is also known as New Issue Market as in this market only new companies can issue their securities and buyers have only buying option.

Detailed explanation-4: -The types of primary market issues include initial public offerings (IPOs), Follow-on Public Offerings (FPOs), Rights issues, Bonus issues, Private placements, Preferential allotments, and Qualified Institutional Placements.

Detailed explanation-5: -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.