Question 13 of 20
Q.Distinction between primary and secondary market.
Yanam BieapBIEAP AP Intermediate (2nd Year) Commerce Board 2019Subjective· 5mImportance★★★★★est
65% · 13/20 Questions
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Start your 14-day free trial to unlock the full solution →The primary market deals in new securities issued for the first time (funds go to the company), while the secondary market deals in existing securities traded among investors at a stock exchange (funds pass between investors).
Distinction between Primary Market and Secondary Market
| Basis | Primary Market | Secondary Market |
|---|---|---|
| Meaning | Market for new issues; securities are sold to investors for the first time | Market for existing securities already issued earlier |
| Also called | New Issue Market (NIM) | Stock exchange / after-market |
| Flow of funds | Funds flow directly to the company issuing the securities | Funds flow between investors; the company gets nothing |
| Securities dealt in | Only new securities (IPOs, FPOs, rights issues) | Securities already in existence and listed |
| Parties | Company and investors | Investors (buyers and sellers) through brokers |
| Place of operation | No fixed geographical place | A specific, organised location (the stock exchange) |
| Price | Price is generally fixed by the company/issuer | Price is determined by demand and supply (market forces) |
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