1.

Differentiate primary market and secondary market: primary security and secondary
security.

Primary market is where securities are created, it is where the firms floats new
stocks and bonds to the public for the first time. It is also where the buyers and sellers can
transact and negotiate directly without any intermediaries. While Secondary market, or
most commonly referred as the stock market is where the trading of those securities are
happen.
Primary security refers to the new securities issued by an institution, which are
purchased in the primary securities market. On the other hand, secondary securities are
those securities that an investor would purchase from another investor, not involving the
issuing entity.

2. Differentiate money market and capital market.

Money market includes assets that deal with short term borrowing, lending,
buying and selling. They offer safer assets and higher liquidity. They usually offer low
but steady returns. They generally deals in promissory notes, bills of exchange and
commercial paper. On the other hand, capital market allows long-term borrowing or
lending to corporations and investors who have large amount of wealth. In capital market,
there is no actual cash involve in trading, it is usually done through credit instruments
like, stocks, bonds, shares, equity, debentures and securities, they also offer high-risk
investments and includes equity market and debt market.

3. Discuss the different types of investors.

The different types of investors are, Banks, Angel investors, Peer-to-peer lenders,
Venture capitalists and Personal investors.
Banks are better options for more established business, they are the classic source
for business loans.
Angel investors are individuals with an earned income that exceeds $200,000 or
who have a net worth of more than $1 million. They are found across all industries and
are useful for entrepreneurs who are beyond the seed stages of financing but are not yet
ready to seek out venture capital. They are a former entrepreneur that usually operate
alone and play mainly as an advisor to the operations of the investee firm.
Peer-to-peer lenders are individuals or groups that offer funding to small business
owners. In order to work with this kind of investors, entrepreneurs must apply in a
specialized peer-to-peer lending, after application is approved, that the lenders can
determine what business they are going to support or invest to.
Venture capitalist, are used only after a business begins to show significant
amount of revenue. They provide capital to promising business ventures. They often
 demand 50 percent or more ownership over the investee firm. Their main objective is to
bring the business to its initial public offering (IPO) so that they can sell their share to the
public in the high profit and get out.
Personal investors, in this type of investors, they often rely on family, friends or
close acquaintances to invest in their companies, especially in the beginning. Although it
is easy to ask a relative or friends to invest in your business there is always a legal
limitations on the numbers of investor’s allowed.

4. Differentiate stock market, bond market, and derivative market.

A stock market is where investors go to trade equity securities issued by a

corporation. Bond market, on the other hand is where the buying and selling of debt
securities, prominently bonds issued by corporations or government happen. Bond market
does not have centralized location to trade, bonds are sold over the counter. While
derivative market is the financial market for derivatives, financial instruments like future
contracts or options, which are derived from other forms of assets.

References
Basu, Chirantan. "Chron." Chron Web site. n.d. https://smallbusiness.chron.com/capital-market-vs-
derivatives-market-36661.html.

Bernstein, Rebecca. "StartupNation." StartupNation Web site. March 28, 2018.

https://startupnation.com/sponsored-content/types-investors-startups/.

Morah, Chizoba. Investopedia. september 22, 2020.

https://www.investopedia.com/ask/answers/09/difference-between-bond-stock-market.asp.

"Wikipedia." Wikipedia Web site. n.d. https://en.wikipedia.org/wiki/Derivatives_market.