Primary Market In 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. In this case, for a particular security banks will do the initial subscription for investors to buy the securities and it is a better opportunity to buy the securities from the bank. An initial public offering will only appear when private companies issue their shares or 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 Shouldn't Be Banned"? Get Original Essay The primary market includes 2 types of shares that can be offered to the investor, i.e. Private Placement: Private Placement means that the company will issue or sell its shares to the specified investors, before their shares are accessible to the public . Preferential Allocation: Preferential Allocation means that companies will issue the shares to investors at a price already specified by the company, but that specified type of shares will not be able to access by the general public because it is more expensive than the share available to the public. An important aspect in the primary market is that the investor can purchase the securities directly from the issuing company. Fair Issue: In fair issue the company will issue the additional shares to the investor who already owns the share of the particular company and will be offered to the existing shareholders of the company at a pre-determined price. Here, investors do not have to pay any tax on their dividends. Public issuing: in the public issuing company will issue the shares to the qualified participants in the process of issuing the securities in the market. Below are some of the features of the primary market: Primary market issues the new shares and bonds to the new investors to raise funds for the expansion of their business. Investors can purchase stocks or bonds directly from the issuing company. Hires or appoints investment bankers to acquire large numbers of institutional investors. Primary Market is also known as "New Issue 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 investment banks to sell or buy new common shares to 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 shares 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 on the open market. There will be a greater number of trades taking place in the secondary market than in the primary market. In the secondary market, it includes the stock market and the debt market. Below are the two types of secondary markets: Please note: This is just an example. Get a custom paper 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 price of their stocks or shares publicly, investors who want to purchase such securities in this.