Tradersguruji

  Buying Stock: Primary and Secondary Markets If you buy shares in a company, it doesn't necessarily mean you're buying it from another shareholder who wants to sell their stock. There are two main markets where securities are transacted: the  primary market  and the  secondary market . When stocks are first issued and sold by companies to the public, this is called an initial public offering, or IPO. This initial or primary offering is usually underwritten by an investment bank that will take possession of the securities and distribute them to various investors. This is the primary market. Investors participating in the primary market are thus buying stock directly from the issuing company. Prices on the primary market tend to be set prior to the IPO, so the investor knows how much they will pay in order to invest in shares of that company's stock. However, this market is usually dominated by sophisticated and experienced investors, such as...