Featured Article: Primary Capital Market Vs Secondary Capital Market

The major different between Primary market and Secondary markets is ; in Primary markets , investor buy securities directly from the company issuing them while the in the Secondary market investors trade securities amongst themselves.

In the primary market all proceeds go the issuer after expenses have been paid out to the various professional who helped in the execution of the offering. The Secondary market provided trading for the already issued securities. Moreover none of the proceeds flow back to the issuer.

In a new issue , on the primary market, most of the terms are usually set , including the initial price, interest rate, and the type of security to be sold to investors, with the issuer receiving the proceeds of the sale.

On the other hand , a transaction on the secondary market is fluid , and only involves the buyer and the seller. Secondary market transactions involve a brokerage firm which acts either as an intermediary between the buyer and seller, or as a buyer or seller itself. Market conditions, such as prevailing interest rates, supply and demand, and credit quality, among other variables, determine the price, which may differ from the original price.

Secondary Market exist because the value of an asset changes in a market economy. These changes ae driven by technology , individual tastes, depreciation and improvements with other countless considerations.

Secondary markets exist because the value of an asset changes in a market economy. These changes are driven by technology, individual tastes, depreciation and improvements, and countless other considerations.

Through massive series of independent yet interconnected trades, the secondary market drives the price of securities toward their actual value. Moreover, the secondary markets create additional economic value by allowing more beneficial transactions to occur. The net result is that almost all market prices – interest rates, debt, houses and the values of businesses and entrepreneurs – are more efficiently allocated because of secondary market activity.

On the reverse side , Primary markets exist to facilitate capital growth . It’s a platform where companies are able to issue new stocks to raise money directly from households fro business expansions or to meet financial obligations It provides a channel for the government to raise funds from the public to finance public sector projects., the primary market exists for the issuance of new securities by corporations and the government directly to investors