Page 2 - Lesson Note 2
P. 2
The Capital Market can be divided into two parts:
a. Primary Market
b. Secondary Market
Distinction between Primary Market and Secondary Market
PRIMARY MARKET
The primary market is also known as the new issues market. It deals with new securities being
issued for the first time. The essential function of a primary market is to facilitate the transfer
of investible funds from savers to entrepreneurs seeking to establish new enterprises or to
expand existing ones through the issue of securities for the first time. The investors in this
market are banks, financial institutions, insurance companies, mutual funds and individuals. A
company can raise capital through the primary market in the form of equity shares, preference
