We will know the What is Primary Market? Meaning Functions.
What is Primary Market? Meaning Functions
Meaning:
Primary Market is the market place where new are share issued through IPO. Underwriters helps the companies to issue the IPO. Underwriters can be Investment banks, Capitals, etc. The need to be listed in NEPSE to get traded in secondary market.
Usually company obtain financing through equity and debt.
The primary characteristics of the primary market is that the investor buys share from the company itself. In primary market, people buy share of the company which are listed in stock exchange.
Functions of Primary Markets:
- The primary market offer new issue to the general investor.
- Those share which are are not sold in primary market are need to be bought by underwriters.
- There will be new issue distribution.
Advantages of Primary Market
- The companies can easily raise the capital through IPO. It is cost effective.
- Primary market is one of the investment scheme for the general investor.
- There is few chance of price manipulation. It means distribution of share is free and fair in primary market.
Disadvantage of Primary Market
- People do not get enough information about company before investing in IPO.
- There is high degree of risk because it does not have trading history.
- Sometime it takes time to get listed in Stock Exchange. So, the money of the investor will be in hold for more period of time.
Hence, there are the meaning, functions, advantages, and disadvantages of the primary market.
Other Important Links:
Primary Market Vs Secondary Market: CLICK HERE
Meaning of secondary Market: CLICK HERE
Frequently Asked Question
1. What is primary Market?
= Primary Market is the market place where new are share issued through IPO.
2. Who can invest in primary market?
= Those people who have D-mat accounts can invest in primary market. There are two ways to invest in primary market either directly from mero share account or through bank.
3. Is primary Market separate from secondary market?
= Yes, primary market is separate from the secondary market.
4. Is it risky to invest in primary market?
= There is risk as well as opportunity to invest in primary market.
