Chapter 3

 Primary market Vs. Secondary market.

 Primary market: when stock is issued for the first time ever in the life of the company.
o Privet business when they decide to convert to public company, so they have to start
issuing stock.
o That refers to IPO (Initial Public Offering): first sale of stock by formerly private
company.
o As individuals we can only buy stock.
o As Corporation they will receive cash when they issue for the first time (they can only
buy from the company).
 Secondary market: Existing in the financial market.
o As individuals we can buy and sell stock.
o As Corporation there is no role of corporation anyone can sell their stock
(stockholders).

 How to convert from private to public company (enter primary market).

1- They need to contact the investment bank to help to convert from private to public (they
need to meet all the requirements – if they are ready for the IPO. The investment bank
prepares prospectus: document prepared by investment bank describing everything related
to the Company and to the IPO). (Pay the assessment fees to investment bank).

2- The investment bank takes the role of underwriters.

- The company will sell the stock to an investment bank.
- The investment bank will issue stocks in the financial market.

 Issuer and banker put on road show: series of presentations made in various locations leading up
to an initial public offering. (To receive feedback)

 Broker market Vs. Dealer market.

- Broker market:
o Brokered market It must exist physically. (ADX, DFM)
o Third party (broker).
o Choose a broker, Open an Account to deposit your money, broker to buy and sell.

- Dealer market:
o The dealer market does not exist, everything is done online (Nasdaq Dubai).
o Third party buy and sell on behalf (Investopedia, platform).

 Type of order
- Market order:
o Bid price: the offer price (is what the other offers you if they want to sell your stock).
o Ask price: the purchasing price (is what the price the seller offers).
- Limit order
o Limit buy/sell order: Buy (you will not pay more than limited price – Maximum – not
more than 10$), sell (the minimum limited to price if you want to sell – not less than
10$).
o Stop order: if its buy stop if its more than 10$ / if its sell stop if its less than 10$.