Invester Preference In Primary Market Essay

CHAPTER – I

INTRODUCTION

This part of the study incorporates the background of the study, scopes of the study, statement of the problem, problems and organization of the study. So this chapter is basically focused on introducing the research problems basically.

  1. Background of the Study
Capital market plays a vital role in the developing nation's economy.   The primary share market is the market for new issue of securities.   It is the media through which new financial assets are issued or generated.   This is the first issue market that attracts investors to invest in the shares of the issue companies.   The success of the capital market depends on primary market and this ultimately provides a basis for multiple transactions in secondary market.   After securities have been purchased from the primary market, they can be traded in the secondary market.   The secondary market comprises the organized security exchanges and a specialist facilitates the transaction.   The major of all capital market transaction occur in the secondary markets.   The proceeds from sale of securities in the secondary markets do not go to the organizational issuer instead to the initial owners (sellers) of the securities.   Nepal Stock Exchange Limited (NEPSE) is only the secondary market in Nepal.

The major function of the stock market is to provide steady and continuous market purchase and sale of securities at a competitive price by importing marketability and liquidity.   It is also a medium through which scattered saving and scares resources and transferred into productive areas that ultimately help to the economic development and industrialization of the country.

Initial public offering (IPO) occurs when a security is sold to the general public for the first time, with the expectation that a liquid market will develop.   An IPO can be of any debt or equity security.   Most companies start out by raising equity capital form a small number of investors, with no liquid market...