It is also called new issue market,because in the primary market the company issues new shares or bonds to the investor. the transaction happens directly between company and the investor called primary market.The price would be decided by the company and the investment banker.
Methods of raising money through primary market:
- Public issue
- Private placement
- Right issue
when the company issues its shares first time to the public which is also called initial public offering (IPO). The investors should be more than 50 persons.
In private placement,the company gives its shares to the selected investors like mutual fund,insurance company,banks,venture capitalist etc called private placement. The selected investor should not be more than 50 person.
In right issue,the company issues new shares to the existing shareholder. Right issue price will be less than current market price. for eg: 1:2 means in right issue the existing shareholder will get 1 share each for their 2 shares.
The secondary market will be generally between investors to investors i.e(public to public) no interference of particular company. In this market the price will be decided by demand and supply.It is also called as After market because the shares which have been trading are issued before coming to this market.