What are the advantages and disadvantages of primary market?

Answer 1

Advantages = Relatively low risk stable investment (vs. bonds and stocks) that tends to earn a return greater then a checking or savings account. Disadvantages = Not insured (like checking and savings accounts) by the FDIC (federal depository insurance co.), therefore it can technically lose all of its value. Also the interest rate that you earn tends to be variable, whereas most checking and savings accounts are fixed rates. If you like this answer, you may also like the topics on my blog here: www.onemillionbucks.net

Answer 2

ADVANTAGES OF A PRIMARY MARKET

These are markets that deal with securities that have been issued for the first time. The money flows directly from transferor (saver of money) to transferee (investing person). They facilitate capital formation.

Economic Advantage of Primary Markets

1. Raising capital for business.

2. Mobilising savings

3. Government can raise capital through sale of Treasury bonds

4. Open market operation to effect monetary policy of the government i.e control of excess liquidity in the economy

5. It is a vehicle for direct foreign investment.