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Shares Made Simple: A beginner's guide to the stock market by Rodney Hobson

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Chapter 2: How Shares Are Created

Primary market

The primary market is the creation and sale of new shares. Most of the time you will be buying second-hand shares but we will look first at the different ways in which new shares may be issued to the public.

By the ‘public’ we do not just mean small investors like yourself or wealthy individuals. Shares are also held by large institutions such as pension funds. We shall refer to these as institutional investors.

Initial public offerings

When a company decides that it wants to raise money by issuing shares to the public for the first time it will make what is called an initial public offering (more usually referred to by the initials IPO).

This is also dubbed as coming to market or ...

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