Question

1. Evaluate the difference between the primary market and the secondary market.

     Explain how financial intermediaries channel household savings into financial     investment. (300 words)

thank you

Answer 1

A. Difference between the primary market and the secondary market-

1.Primary market is platform for issuance of new share while Secondary market is place where already issued shares are traded

2.Primary market is a place for direct purchase while secondary market is a place for indirect purchase

3.Shares could be sold once in primary markets while shares could be sold for multiple times over secondary markets

4.The underwriters are intermediary over primary markets and brokers are intermediary over secondary markets.

B. Financial intermediaries are responsible for channelising the household savings into financial markets . Financial intermediaries are Brokers over Secondary markets and Underwriters over primary markets

They persuade people to invest into financial markets in exchange of a fees .They promises to people to make returns which will exceed the bank rate or other fixed deposits rate so people atre lured into investing into such securities.

Financial intermedisries are institution or individual that serves as a middleman among diverse partiesto facilitate different financial transactions.They charge a commission to make households invests into the complex securities with transparency and ease.