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Question
Distinguish between the following.
Primary market and Secondary market
Solution
| Points | Primary Market | Secondary Market | |
| 1. | Meaning | The issue of new shares by the company is done in the primary market. | The securities issued earlier are traded in the secondary market. |
| 2. | Mode of investment | The securities are acquired directly from the company. It involves direct investment in securities. | The securities are acquired from other stakeholders. It involves indirect investment in securities. |
| 3. | Parties in action | The parties dealing in this market are companies and investors. | The parties dealing in this market are only investors. |
| 4. | Intermediary | The underwriters are the intermediaries. | The security brokers are the intermediaries. |
| 5. | Value of security | The price of a security in the primary market is fixed as it is decided by the company. | The price of a security is fluctuating, depending on the demand and supply conditions in the market. |
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RELATED QUESTIONS
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Full form of IFCI
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| Group 'A' | Group 'B' |
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| (b) Financial market | (2) Must inform the stock exchange about dividend declaration. |
| (c) Price of shares mentioned in the prospectus | (3) Trading of financial securities |
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| (e) Listed company | (5) Must inform the government about dividend declaration |
| (6) Fixed price issue method | |
| (7) Risky investment | |
| (8) Trading of commodities. | |
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| (10) Book-Building Method. |
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| Column - I | Column - II | ||
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| c. | Secondary market | iii | It is also known as New issue market |
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