Questions On Securities Market And Traded On Secondary Markets

824 WordsMar 1, 20174 Pages
Q. 2. Explain how securities are issued in the primary market and traded on secondary markets. “There are two different types of securities markets: the primary securities and the secondary securities market” (Kelly & Williams, 2016, pg. 165). So, what does the term primary securities mean, it’s a market that describes a portion of the capital market where new securities are issued by companies, government entities; or public institutions. In this market, there is more than one way to issue securities, the first is what is known as the public offering; it’s where anyone that is trying to raise their financial capitals within that market can investing by purchase these financial securities from that of the public. Therefore, these public…show more content…
Though, these investment banks are well compensated for every sell the make on the actual sell of these securities, so they will make every effort to approach the situation any way possible; just to land extra security for themselves. In addition, the bank or financial institution will pledge to buy whatever shares do not sell through these investment banks, and replace them with new ones at an adequate price; that all are on agreement too in order to gain a profit of some sort. Unfortunately, in order for the firm to go out on the limb publicly, it must first file what is called a registration statement through that of the (SEC); containing the necessary requirements the name of the corporation manager, what assets they own, their competitors’ names; and what these funds are intended to be use towards before even being considered any form of offering. Therefore, no sale can move forward, until the (SEC) gives the firm the red light to proceed with the offering of these securities; or confirms the statement to be that of a functional fact. On the other hand, there is yet another method to which one can apply to that of securities, and that is what is called private placement; securities that are sold to one or more investor, individual, or that of an institution; through that of bargaining among the two main investors (the issuing firm and the private investors). However, while knowing the difference between the two methods of issuing is

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