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प्रश्न
Differentiate between ‘primary market’ and ‘secondary market’ on any five basis.
State any five points of difference between ‘primary market’ and ‘secondary market’.
Differentiate between ‘primary market’ and ‘secondary market’ on the basis of any three points.
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उत्तर
| Sr. No. | Basis of Difference | Primary Market | Secondary Market |
| 1. | Securities Traded |
The sale and purchase of newly issued securities take place in the primary market. There is the sale of securities by new companies or new issues of securities by existing companies to investors. |
The sale and purchase of already issued securities take place in the secondary market. There is the trading of existing shares only that have already been floated in the primary market. |
| 2. | Instruments | The company sells securities to the investor directly or through an intermediary. | Investors exchange ownership of existing securities. The company is not involved in the buying or selling process. |
| 3. | Issued by | Securities are directly issued by companies. | Securities are among investors, and hence, there is no involve. |
| 4. | Price |
Prices are fixed by the company and its management. Prices are determined and decided by the management of the company after giving consideration to a lot of factors. |
Prices are fixed by forces of |
| 5. | Geographical Area | No fixed place for a primary market. | Fixed area and working hours under a secondary market. |
| 6. | Purchase and Sale |
Securities can only be purchased in the primary market. Only buying of securities takes place in the primary market, securities cannot be sold there. |
Securities can be both purchased and sold in the secondary market. Both the buying and the selling of securities can take place on the stock exchange. |
| 7. | Capital Formation |
Directly promoted funds from savers to investors are directly channelized for productive purposes. The flow of funds is from savers to investors, i.e. the primary market directly promotes capital formation. |
Indirectly promoted because the liquidity of securities is augmented. Enhances encashability (liquidity) of shares, i.e. the secondary market indirectly promotes capital formation. |
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संबंधित प्रश्न
Answer each of these questions in about fifteen words:
Which sources provide the supply for long-term funds?
Answer each of these questions in about fifteen words:
Name the sources of demand for capital comes from.
Answer each of these questions in about fifteen words:
Define capital market.
Answer each of these questions in about fifteen words:
Name the two players in the capital market.
Answer each of these questions in about fifteen words
identify the method of raising additional finance from existing shareholders by offering securities to them on pro-rata basis.
Answer each of these questions in about one hundred and fifty words:
Explain how capital markets are the most important source of raising finance for an entrepreneur.
High Order Thinking Skills
Why primary market is also known as new issue market? Give one reason.
Assertion and Reasoning:
- Assertion (A): Regional stock exchanges have witnessed a sharp decline in the volume of trade.
- Reasoning (R): Investors prefer to trade in securities listed in premier stock exchanges like BSE, NSE, etc.
Justify the following statement.
Capital market is useful for the corporate sector.
Assertion (A): Stock exchange is an important constituent of the money market.
Reasoning (R): Stock exchange is an organization in which stocks, bonds, commodities etc. are traded.
Primary and secondary markets
Which market directly contributes to capital formation?
Who plays a very vital role as a financial intermediary?
State any one advantage each for a company that opts for private placement and rights issue as a source to raise funds.
Identify the place where transaction happens in shares or debentures subsequent to its primary offering.
In its vital role as a financial intermediary, capital markets satisfies the tastes of the savers and the need of the investors. Evaluate the given statement.
Complete the correlation:
Money market : Short term funds :: ______ : Long term funds.
Complete the correlation:
Money market : Short-term funds :: ______ : Long-term funds.
Complete the correlation.
Money market : Short term funds :: ______: Long term funds
