Functions of a Primary Market are 1 Primary markets enable corporations to raise capital by issuing ...........

Finance (Phase -I & II) Valuation of Securities

Functions of a Primary Market are -

1.Primary markets enable corporations to raise capital by issuing shares of common stock or bonds.

2.The different types of primary market transactions that a corporation can engage in include public issue, rights issue, and private placement.

3.Initial public offering (IPO) is a special case of public issue in which a private company offers its securities to public for the first time.

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Explanation:

Functions of a Primary Market-
1. Primary markets enable corporations to raise capital by issuing shares of common stock orbonds.
2. The different types of primary market transactions that a corporation can engage in include public issue, rights issue, and privateplacement.
3. Public issue: a public issue occurs when a corporation offers its shares to public at large. Initial public offering (IPO) is a special case of public issue in which a private company offers its securities to public for the first time.
4. Rights issue: a rights issue occurs when a corporation issues new shares to existing shareholders of a company in proportion to their currentholding.
5. Private placement: a private placement occurs when a corporation sells its shares to a select number of large investors such as pension funds, endowments,etc.
6. A public issue is underwritten which means that a syndicate of investment banks acts as an intermediary in that it purchases securities from the issuer and sells them to retail investors and earns a profit in the process.