Question

Explain the difference between the primary and secondary markets. What roles do banks play in these markets?

Please don't hand write.

Please don't copy the same answer from some one else.

Thank you.

Answer 1

Capital market is the market for long term funds.It is a market for buying and selling of equity,debt,and other securities etc.Normally capital markets are deals with long term securities which have maturity value more than 1 year.

The components of capital market are 1-primary market 2-secondary market

Primary market is the market for fresh issue of securities.it is also called new issue market.

Secondary market is the market for second hand securities

Difference between money market and capital market are

PRIMARY MARKET	SECONDARY MARKET
It is a market for fresh issue of shares	It is a market for existing securities
There is no fixed location for exchange of securities	There is a fixed location to operate transaction(stock exchange)
Securities are need not be listed	Securities should be listed in stock exchange
It directly promotes capital formation	It indirectly promotes capital formation
Investors can buy the securities, not to sell	They can buy and sell securities

some commercial banks act as collecting agents and some acts as coordinating bankers,some are brokers, and some are merchant bankers.The banks engaged in transfer,transmission,and safe custody of funds.