Question

3. What is the difference between a primary and a secondary market?

Answer 1

The difference between a primary and a secondary market is as follows:

In the primary market the securities are issued to the public for the first time i.e. at the time of Initial Public Offering (IPO). Whereas in secondary market those securities are traded in the stock exchange which are already issued to the public.

In primary market, the securities are sold in the market only once but in secondary market, the securities can be sold multiple times in the market.

Further in the primary market the buying and selling of the securities are done between company and investors, whereas in the secondary market buying and selling of the securities are done among the investors.

The prices of the shares that are issued in the primary market are generally fixed at par value whereas in the secondary market it keeps on fluctuating according to the demand and supply in the market.

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