Primary Markets

Dr CA Shilpa Bhide
Capital Markets
Market for financial assets which have a long or
indefinite maturity.
Further divided into:

Primary Market
Secondary Market
Primary Markets
Primary Market is known as the New Issue Market
Operations in Primary Markets
The firms go to the public for the first time through
initial public offer. (IPO)

Firms which are already trading raise additional

capital through seasoned equity offering ( FPO)
Methods of Floating New Issues
Public Issues
Rights issue
Private placement
Bonus Issues
Instruments
Equity Shares

Preference Shares

Debentures /Bonds
Equity Shares
They contribute to the share capital.

They are also referred to as ordinary shares

They have voting rights.

The Amount of Dividend is not fixed.

At the time of Winding up, they are the last to receive the
share back.
Preference Shares
They have a fixed rate of dividend.

They have a preference or a priority at the time of

payment of dividends and in winding up over the
equity shares
Debenture or Bonds
They are debt instruments.
They maturity period is long term
There is a fixed rate of interest.
They may be
 Convertible
 Non Convertible
 Fully or Partly convertible
 Redeemable/Irredeemable
Dividend
Part of the Profits distributed to the shareholders
References and Readings
Financial Management : I.M.Pandey
 Financial Management : Rustagi