Question

What is the difference between primary markets and secondary markets?Explain

What is the difference between money markets and capital markets?Explain

What are three (3) of the seven (7) types of financial institutions? Include a description of the main services offered by each. Explain

Why would the U.S. government, local governments, and corporations issue bonds? Explain

Provide the definitions of a discount bond and a premium bond. Give examples.

As owners, what rights and advantages do shareholders obtain? Explain

Why might the Standard & Poor's 500 Index be a better measure of stock market performance than the Dow Jones Industrial Average?Why is the DJIA more popular than the S&P 500? Explain

What are the differences between common stock and preferred stock? Explain

Answer 1

What is the difference between primary markets and secondary markets?Explain

The Securities Market or the Capital market is made of two parts,namely Primary Market and Secondary Market.

In the Primary Market newly issued securities are offered in order to raise capital ,whereas in the Seconday Market per issued securities are bought and sold between the investors.The fundamental difference between primary and secondary market is that, securities are created in primary markets,while they are traded amongst various investors in the secondary market,which means that the primary market involves the sale of securities by the company to the investor and in the secondary market the securities are traded between different investors.

Primary Market:

Primary market is also known as New Issue Market as new securities are created for the purpose of fulfilling the capital requirement of the firm.The process of Initial Public Offering (IPO) by means of underwriting take place in this market.In the primary market the securities are directly purchased from the issuer of the security.

Secondary Market:

Secondary market is also known as the After Market.It involves the buying and selling of the securities like stocks,bonds,options etc which are issued by the primary market.The trade of securities in the secondary market takes place between various investors in Stock Exchanges where all the securities are listed for the purpose of trading.

A quick overview of the key differences between the Primary and Secondary market can be observed by stdying the table below.

Points of difference	Primary Market	Secondary Market
Meaning	Market for new issue of shares.	Market for previously issued shares.
Parties involved and Number of Transactions.	Company and Investors.Single transaction takes place as the security is sold only once.	Numerous parties namely investors are involved.Multiple transaction take place as the securities are trade innumerable times.
Gainers of amount of transaction.	The issuing company gain the amount from the transaction.	The investors gain amount from the transaction.
Price of the security.	As it involves the fresh issue of securities,the price is fixed.	The price of securities fluctuates as per the demand and supply forces of the market.
Intermediaries.	The underwriters.	The brokers.