Question
Distinguish between Primary Market and Secondary Market.
| S.No. | Basis of Distinction | Primary Market | Secondary Market |
| 1. | Nature of Securities traded | New securities are issued by new and existing companies | Existing securities only are purchased and sold |
| 2. | Involvement of the company | A company sells securities to investors directly or through an intermediary | Investors exchange ownership of securities. The company is not involved at all |
| 3. | Capital formation | There is a flow of funds from savers to investors. It directly promotes capital formation | Liquidity of securities is enhanced. It indirectly promotes capital formation |
| 4. | Buying and selling | Only buying of securities takes place | Both buying and selling of securities takes place |
| 5. | Price determination | The company determines the price of securities to be issued | Demand and supply of securities determine the price |
| 6. | Location | There is no fixed, geographical location of the market | The market is located at a specified places. |
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| TRIAL BALANCE of A.B. Chandra As on 31.12.2019 | |||
| Particulars | Amount (Dr.) | Particulars | Amount (Cr.) |
| Cash in Hand | 2,000 | Discount Received | 750 |
| Drawings | 2,800 | Capital | 40,000 |
| Opening Stock (01/01/2018) | 4,000 | Purchases Returns | 1,250 |
| Wages | 2,000 | Sales | 83,000 |
| Cash at Bank | 3,500 | Creditors | 15,000 |
| Insurance | 700 | Bank Loan | 10,000 |
| Trade Expenses | 1,200 | ||
| Furniture | 20,000 | ||
| Buildings | 61,000 | ||
| Salaries | 5,000 | ||
| Discount Allowed | 750 | ||
| Sales Returns | 3,000 | ||
| Purchases | 31,250 | ||
| Debtors | 10,000 | ||
| Telephone Charges | 1,000 | ||
| Bills Receivable | 1,800 | ||
| 1,50,000 | 1,50,000 | ||