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i. Primary markets and secondary markets
Primary markets-
Are those financial markets in which the financial securities are issued for the first time in
the stock exchange. Like for companies that are making are initial public offering will sell
its securities for the first time in the primary financial markets.
Secondary markets-
Are those markets for subsequent selling and purchase of the financial securities i.e. a
company which is already listed in the stock exchange will sell its securities in secondary
financial markets.
ii. Capital markets and money markets
Capital markets-
Are those markets for long term sources of finance. Long term loans for development of the
country are normally offered through the capital market. The major roles of the capital
markets include;
• It provides long term sources of finance which is important for development purposes
• It provides permanent finance which is necessary for strong financial base for going
concern.
• It’s a channel through which foreign investments find their way into the country.
Money markets-
It’s a market concerned with short term financial securities. It offers the following services;-
• It offers a medium through which short term financial securities can be discounted.
• It offers advice to the concerned parties as to which appropriate finance will meet
their financial requirements.
• It acts as a source of finance to small businesses which are unable funds in capital markets.
• It is a channel through which government investment such as treasury bills and
government bonds are offered to the general public.
iii. Brokers and jobbers
A broker is an agent who buys and sells securities on behalf of his clients on a commission
basis. He is a member of the stock exchange who can be suspended in case of mal practice.
He gives advice to the client and sometimes manages the clients’ portfolio.
Jobbers are principals who buy and sell securities on their own name. Since jobbers are
experts in the market they are not allowed to deal with the general public and can therefore
deal with the brokers or other jobbers.
Kavungya answered the question on March 30, 2022 at 09:25
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