WHAT IS SECONDARY MARKET
Securities like Bonds, Debentures, Stocks are traded or invested under Capital Market. This Capital market is classified into two types, which are, Primary Market & Secondary Market. Primary Market is also known as "New Issue Market", while Secondary Market is known as "After Market"
WHAT IS SECONDARY MARKET
Secondary Market is the market where existing securities will be traded. It is also known as the stock market which includes NSE and BSE. Securities which bought in Primary market are sold in this bracket between the investors.
HOW THE SECONDARY MARKET WORKS
In Primary Market, securities are created newly and it will be sold to the investors, which is issued directly to the investors from the issuers or owner of the company, thats the one time transaction.
If the investors want to sell those securities to other buyers, that investors will come to secondary market, in this secondary that existing securities will be sold based on supply and demand to other investors, that money will not go to the hands of the issuers or owner of the company.
In Primary market itself, capital are generated and it will be known as Equity, money generated in secondary market will not be the part of the owners, money will be circulated between the investors.
WHATS THE BENEFITS FOR THE ISSUERS FROM THIS
Existing Securities which are traded in this secondary market and the money will be circulated between the investors not to the owners of the company.
Due to this, there are more benefits for the issuers, important one is Supply and Demand, they can predict it by the movement of the stocks, next thing this, they can predict the fair price of the stock. Third one is economic growth due to their stocks, fourth is they have the effective buyers, if that company again go to the primary market for generating the capital.
24 сен 2024
