Secondary And Primary Markets - SS2 Economics Lesson Note

Secondary Markets

The secondary market refers to a market where previously issued securities are bought and sold among investors, rather than from the issuer. This includes stock exchanges like the Nigerian Stock Exchange, where buyers and sellers can trade stocks and other securities. In this market, the prices of securities are determined by supply and demand and are subject to fluctuations based on a variety of factors, such as company performance, economic conditions, and investor sentiment. The secondary market provides liquidity to investors who want to buy or sell securities, and it also helps to set prices based on market forces.

Primary Markets

The primary market refers to the market where newly issued securities are sold for the first time, typically through an initial public offering (IPO). In this market, companies raise funds by selling their securities directly to investors, such as stocks or bonds. The primary market is where the securities are first created, and the proceeds from the sale go to the issuer.