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Functions of primary market

Updated: 9/11/2023
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14y ago

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the main service functions of primary market are as follows:

1) Organisation: deals with the origin of the new issue. the proposal is analyzed in terms of the nature of the security, the size of the issued timings of the issue and flotation method of the issue.

2) Underwriting: underwriting is a kind of guarantee undertaken by an institution or firm of brokers ensuring the marketability of an issue. it is a method whereby the guarantor makes a promise to the stock issuing company that he would purchase a certain specific number of shares in the event of their not being invested by the pubic.

3) Distribution: the third function is that of distribution of shares. distribution means the function of sale of shares and debentures to the investors. this is performed y brokers and agents. they maintain regular lists of clients and directly contact them for purchase and sale of securities.

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12y ago
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