Gujarat BoardEnglish MediumSTD 12 CommerceOCMFINANCIAL MARKET5 Marks
Question
Explain the meaning and characteristics of primary market.
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Answer
Introduction :
Promoters of the company issue various types of securities like equity shares, preference shares debenture etc, to establish, develop and to expand the company.
Investors send money with application to purchase such market securities.
Thus raising by issuing new securities is called “Primary Market.”
Meaning of Primary Capital Market :
Primary capital market is called a market of new securities.
Primary market means a market to sell new securities in order to raise capital fund.
Primary market is a market of selling only new securities issued for the first time.
So investors can buy new securities.
Characteristics of Primary Capital Market :
Sale : Primary market is for newly issued securities.
Investors : Companies sell new securities and investors can buy them.
Intermediaries : There are many intermediaries in primary market. It includes lead manger, registrar to issue (subscription), share broker etc.
Advertisement : Subscription of the capital of new issue is announced in capital market through advertisement.
Conclusion :
Development of primary market in our country is remarkable.
Every year many new companies and some old progressive companies enter capital market with their new securities.
This is important for growth and development of India.
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