What is the difference between primary and secondary markets?
- A Primary markets issue new securities; secondary markets trade existing ones
- B Primary markets trade bonds; secondary markets trade shares
- C Primary markets are for institutions only
- D There is no difference
Answer
Primary markets issue new securities; secondary markets trade existing ones
An IPO takes place in the primary market and the company receives the proceeds. Subsequent trading on the exchange is secondary and does not raise capital for the issuer.
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