Question

Distinguish between the following:

Primary market and Secondary market

Answer 1

	Points	Primary Market	Secondary Market
1.	Meaning	A security market in which new issues of securities, i.e. new shares and debentures are arranged and organised is called primary market	A security market in which existing securities are purchased and sold repeatedly is called a secondary market.
2.	Mode of Investment	Direct investment in the securities. Securities are acquired directly from the company.	Indirect investment, as the securities are acquired from other stakeholders.
3.	parties in action	The parties dealing in this market are companies and investors.	The parties dealing in this market are only investors.
4.	Intermediary	The underwriters are the intermediaries.	The security brokers are the intermediaries.
5.	Value of Security	The price of security in the primary market is fixed, as it is decided by the company.	The price of a security is fluctuating, depending on the demand and supply conditions in the market.
6.	Other name	Primary market is also called the new issue market.	Secondary market is also called the stock market.