Financial Management: Core Concepts, Third Edition

7.2 Stock Markets

There are two major markets for the sale of stock: the primary market and the secondary market. The primary market is the market of first sale, where companies first sell their shares to the public. The secondary market comprises the after-sale markets of the existing outstanding shares. Here individual or institutional stock owners sell their shares to other investors. You can think of the secondary market as the “used stock” market, much as you can think of the secondary market for cars as the “used car” market.

Primary Markets

Although we discuss much of the detailed information about primary markets in Chapter 15, we present some basic information here to provide a foundation for our discussion of issuing shares. First, ...