Question

Explain the difference between the primary and secondary markets. What roles do banks play in these markets? no copy and paste. thank you.

Answer 1

Differences between primary market and secondary market are as follows-

A. In primary market, share are being issued for the first time by company and in secondary markets shares are consistently traded by the traders who are already holding the shares.

B.in primary markets there is a direct purchasing of the shares of the company whereas in secondary market there is indirect purchasing of the shares of the company.

C.in primary market share are only issued for the first time whereas in secondary market share are issued for the multiple Times

D.in primary markets buying and selling of shares between the company and the investors whereas in secondary market buying and selling of the shares is usually between the investors and the other market participants.

E.in primary markets, shares are issued for the fixed price whereas in secondary markets the prices are kept on fluctuating depend upon demand and supply.

Bank will play the act of intermediaries in the primary market when it will be securing the funds from the investor and it is investing into the shares and in secondary markets banks are also providing the support to the investor's dematerialised accounts and they are used for providing funds for buying & selling of the assets so in both the markets, banks are playing an important role in order to trade the securities.