THE BEECHMONT CREST ONLINE GUIDE TO STOCKS AND INVESTING
SECURITIES MARKET
A securities market is also referred to as a financial market. The purpose of a securities market is to bring together two groups: those who have capital to invest (investors), and those who want to borrow the capital (corporations). So, when an investor invests in a company, she is actually loaning the corporation her money--which the corporation agrees to pay back at some point in the future.
When the payment and payback date of a security are fixed, the security is a fixed income security. Fixed income securities are commonly called bonds or commercial paper.
When the amount of payback to the investor depends on how well the company performs, then the security is called common stock or equity.
Securities markets are marketplaces where securities are bought and sold. Securities markets are divided into two categories: primary markets and secondary markets.
A primary market involves purchases of securities directly from the corporation that issued them (or through the corporation’s investment bank)
A secondary market is where securities are bought and sold after they have been issued in the primary market. (You might think of a secondary market as a place for “used” or “secondhand” securities.)