Question

Distinguish between the following.

Primary market and Secondary market

Answer 1

	Points	Primary Market	Secondary Market
1.	Meaning	The issue of new shares by the company is done in the primary market.	The securities issued earlier are traded in the secondary market.
2.	Mode of investment	The securities are acquired directly from the company. It involves direct investment in securities.	The securities are acquired from other stakeholders. It involves indirect investment in securities.
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 a 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.