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Primary Market and Secondary Market. - Secretarial Practice

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Question

Primary Market and Secondary Market. 

Solution

Basis Primary Market Secondary Market
(1) Meaning A security market in which new issue of securities i.e. fresh or newly issued fresh shares, or debentures are sold by the newly established or existing company is called Primary Market.
A Security market in which second hand or existing securities are purchased and sold repeatedly is called secondary Market
(2) Functions
Its main function is to raise long-term funds through fresh issue of securities. So only buying of securities takes place securities can't be sold here by investors. Its main function is to make available continuous and ready market for existing long-term securities. In this market, both buying and selling of securities by the investors takes place.
(3) Participants The main participants of this market are financial institutions, mutual funds, underwriters, individual investors etc.
The main participants of secondary market are the participants of primary market, stock brokers and the members of stock exchanges. 
(4) Listing Requirements In case of primary marrket, listing of securities are not required.   In the case of secondary market, listing of securities are required for their authorised trading. 
(5) Determinants of Price
In this market, the prices of securities are determined by the management of the Corporate houses with due compliance with SEBI's requirement in respect of new issue of securities.
In the secondary market, the prices of securities are determined by the forces of demand and supply of the securities in market.
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Primary Market and Secondary Market. Concept: Transfer and Transmission of Shares.
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