ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Both the primary market and the secondary market are aspects of a capitalist financial system, in which money is raised by the buying and selling of securities-financial assets like stocks and bonds. New securities are issued (created) and sold to investors for the first time in the primary market.

Detailed explanation-2: -Primary markets are markets in which users of funds, raise funds through new issues of financial instruments, such as stocks and bonds. New issues of financial instruments are sold to the initial suppliers of funds (households) in exchange for funds (money) that the issuer or user of funds needs.

Detailed explanation-3: -The users of the funds distributed on capital markets include home and motor vehicle purchasers, non-financial companies, and governments financing infrastructure investment and operating expenses. Capital markets are used primarily to sell financial products such as equities and debt securities.

Detailed explanation-4: -The 4 types of financial markets are currency markets, money markets, derivative markets, and capital markets. Capital markets are used to sell equities (stocks), debt securities.

Detailed explanation-5: -The primary market is where companies issue a new security, not previously traded on any exchange. A company offers securities to the general public to raise funds to finance its long-term goals. The primary market may also be called the New Issue Market (NIM).