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Encyclopedia > Primary market

The primary is that part of the capital markets that deals with the issuance of new securities. Companies, governments or public sector institutions can obtain funding through the sale of a new stock or bond issue. This is typically done through a syndicate of securities dealers. The process of selling new issues to investors is called underwriting. In the case of a new stock issue, this sale is an initial public offering (IPO). Dealers earn a commission that is built into the price of the security offering, though it can be found in the prospectus. Features Of Primary Market are:- The capital market (securities markets) is the market for securities, where companies and the government can raise long-term funds. ... For security (collateral), the legal right given to a creditor by a borrower, see security interest A security is a fungible, negotiable interest representing financial value. ... Funding or financing is to provide capital (funds), which means money for a project, a person, a business or any other private or public institutions. ... Underwriting refers to the process that a large financial service provider takes a dump on your face and then uses it to assess the process of providing access to their product like providing equity capital, insurance or credit to a customer. ... An initial public offering (IPO) is the first sale of a corporations common shares to public investors. ... A prospectus is a legal document that institutions and businesses use to describe what they have to offer for participants and buyers. ...


1. This is the market for new long term capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called New Issue Market (NIM).


2. In a primary issue, the securities are issued by the company directly to investors.


3. The company receives the money and issue new security certificates to the investors.


4. Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business.


5. The primary market performs the crucial function of facilitating capital formation in the economy.


6. The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as ‘going public’.



Methods of issuing securities in the Primary Market


1. Initial Public Offer;


2. Rights Issue (For existing Companies); and


3. Preferential Issue.


See also

Financial markets

Bond market
Fixed income
Corporate bond
Government bond
Municipal bond
Bond valuation
Junk Bond
An initial public offering (IPO) is the first sale of a corporations common shares to public investors. ... Investment banks help companies and governments and their agencies to raise money by issuing and selling securities in the primary market. ... The secondary market is the financial market for trading of securities that have already been issued in an initial private or public offering. ... In economics a financial market is a mechanism that allows people to easily buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect efficient markets. ... Download high resolution version (480x640, 110 KB)Blockade in front of NYSE. Picture taken in April 2004. ... The bond market, also known as the debit, credit, or fixed income market, is a financial market where participants buy and sell debt securities usually in the form of bonds. ... This article or section does not cite any references or sources. ... A Corporate bond is a bond issued by a corporation, as the name suggests. ... A government bond is a bond issued by a national government denominated in the countrys own currency. ... In the United States, a municipal bond or muni is a bond issued by a state, city or other local government, or their agencies. ... Bond valuation is the process of determining the fair price of a bond. ... High yield debt (non-investment grade or junk bond) is a business term referring to a corporate debt instrument, usually a bond, that has a higher yield (compared to investment grade debt) because of a high perceived credit risk (default risk). ...

Stock Market
Stock
Preferred stock
Common stock
Stock exchange
A stock market is a market for the trading of company stock, and derivatives of same; both of these are securities listed on a stock exchange as well as those only traded privately. ... This article does not cite its references or sources. ... A preferred stock, also known as a preferred share or simply a preferred, is a share of stock carrying additional rights above and beyond those conferred by common stock. ... Common stock, also referred to as common shares, are, as the name implies, the most usual and commonly held form of stock in a corporation. ...

Foreign Exchange Market
Retail forex
This article or section does not cite any references or sources. ... The Retail Forex (Retail Currency Trading or Retail Forex or Retail FX) market is a subset of the much larger Foreign exchange market. ...

Derivative market
Credit Derivative
Hybrid security
Options
Futures
Forwards
Swaps
A derivatives market is any market for a derivative security, that is a contract which specifies the right or obligation to receive or deliver future cash flows based on some future event such as the price of an independent security or the performance of an index. ... A credit derivative is a contract (derivative) to transfer the risk of the total return on a credit asset falling below an agreed level, without transfer of the underlying asset. ... Definition A hybrid security, as the name implies, is a security that combines two or more different financial instruments. ... In finance options are types of derivative contracts, including call options and put options, where the future payoffs to the buyer and seller of the contract are determined by the price of another security, such as a common stock. ... In finance, a futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a specified price. ... A forward contract is an agreement between two parties to buy or sell an asset (which can be of any kind) at a pre-agreed future point in time. ... In finance, a swap is a derivative, where two counterparties exchange one stream of cash flows against another stream. ...

Other Markets
Commodities market
OTC market
Real estate market
Spot market
Chicago Board of Trade Commodity market Commodity markets are markets where raw or primary products are exchanged. ... Over-the-counter (OTC) trading is to trade financial instruments such as stocks, bonds, or derivatives directly between two parties. ... Real estate is a legal term that encompasses land along with anything permanently affixed to the land, such as buildings. ... Template:The Spot Market The Spot Market or Cash Marketis a commodities or securities market in which goods are sold for cash and delivered immediately. ...

Valuation and Theories
Market Valuation
Financial market efficiency
Financial market efficiency is an important topic in the world of Finance. ...


Finance series
Financial market
Financial market participants
Corporate finance
Personal finance
Public finance
Banks and Banking
Financial regulation
Finance studies and addresses the ways in which individuals, businesses, and organizations raise, allocate, and use monetary resources over time, taking into account the risks entailed in their projects. ... In economics a financial market is a mechanism that allows people to easily buy and sell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect efficient markets. ... There are two basic financial market participant catagories, Investor vs. ... Corporate finance is an area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions. ...  United States Personal finance is the application of the principles of finance to the monetary decisions of an individual or family unit. ... Public finance (government finance) is the field of economics that deals with budgeting the revenues and expenditures of a public sector entity, usually government. ... “Banker” redirects here. ... Financial supervision is government supervision of financial institutions by regulators. ...

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  Results from FactBites:
 
market trends: Information from Answers.com (1621 words)
A bull market is a prolonged period of time when prices are rising in a financial market faster than their historical average, in contrast to a bear market which is a prolonged period of time when prices are falling.
An example of a secular bear market was seen in gold over the period between January 1980 to June 1999, over which the gold price fell from a high of $850/oz to a low of $253/oz [3], which formed part of the Great Commodities Depression.
The tendency is for positive surprises to characterise a bull market (when the news continually tends to exceed investor's expectations) and conversely negative surprises tend to characterise the bear market (with expectations disappointed).
The Share Market Description (784 words)
The stock market is a highly sophisticated market place where the traded commodity is stocks and shares.
The function of the primary market is to bring together organisations that need funds and investors who want to invest their capital efficiently.
The secondary market is the medium provided by the Stock Exchange which gives investors the opportunity to buy or sell shares, as well as trading other types of equity securities, debt securities and entities such as options, that are based on shares.
  More results at FactBites »


 

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