Primary MarketIn the primary market, securities are created by the company for commercial purposes for the investor. In the primary market, companies will issue or sell their stocks and bonds to the public for the first time to raise funds. The best example for the primary market is the initial public offering. Here for a particular security, banks will do the initial subscription for investors to purchase the securities and it is a better opportunity to purchase the securities from the bank. An initial public offering will only appear when private companies issue their shares to the public for the first time. Underwriting is the process of issuing new shares to investors. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get Original Essay The primary market includes 2 types of shares which can be offered to the investor, namely: Private Placement: Private placement means that the company will issue or sell its shares. to specified investors, before their shares are publicly available. Preferential allotment: Preferential allotment means that companies will issue the shares to investors at a price already specified by the company, but the specified type of shares will not be available to the general public because it is more expensive than the publicly available share . An important aspect of the primary market is that the investor can purchase the securities directly from the issuing company. Rights Issue: In the case of a rights issue, the company will issue the additional shares to the investor who already holds shares in the company in question and it is offered to the existing shareholders of the company at a predetermined price. Here, investors do not have to pay any tax on their dividends. Public Issue: In a public issue, the company will issue the shares to qualified participants in the process of issuing the securities in the market. Here are some of the features of primary market: Primary market issues the new stocks and bonds to new investors in order to raise the funds needed for the expansion of their business. Investors can buy the stocks or bonds directly from the issuing company. It hires or appoints investment bankers to acquire a large number of institutional investors. Primary market is also known as the “new issues market”. This is the market for new long-term equity capital. In the primary market there is no possibility of obtaining new long-term external financing. The primary market involves the investment bank to sell or buy the new common shares for investors with the help of underwriting. The methods of issuing securities in the primary market are: Initial public offering. Rights issue. Preferential issue. Secondary Market The secondary market is the market in which to buy or sell stocks or bonds already traded in the primary market. In the secondary market, companies will have no direct relationship with the secondary market while investors trade their securities in the open market. There will be more transactions carried out in the secondary market than in the primary market. In the secondary market, it includes the equity market and the debt market. Here are the two types of aftermarket: Keep in mind: This is just a sample. Get a personalized article from our expert writers now. Get a Custom Essay Auction Market: Auction market is the place in the market where buyers and sellers will announce the.