Week 11 - Primary and Secondary Stock Markets Flashcards
(6 cards)
1
Q
What is the primary market?
A
Market for the original sources of long-term finance (where businesses raise funds)
2
Q
What are the original sources of long-term finance?
A
- initial public offerings
- seasoned equity offerings
- loan stocks: securities that promise fixed interest payments and repayment of the principal at a specified date
3
Q
What is the primary market to investors?
A
The market in which investors have the first opportunity to buy newly issued securities
4
Q
How are securities purchased in the primary market?
A
Directly from the issuer (offer by prospectus) or the underwriter (offer for sale)
5
Q
What is the secondary market?
A
Where ‘second-hand’ shares and loan stocks are bought and sold (buying or selling existing shares)
6
Q
What is the most common and important form of secondary market?
A
The stock exchanges
