An example of a primary market is a company's initial public offering, or IPO, in which it sells its stocks to the general public for the first time. The primary market refers to a situation in which a company creates securities prior to them being traded on the secondary market.Continue Reading
A company wishing to enter the primary market through an IPO must follow several rules and regulations that dictate the process. To begin the process, a company typically contacts a firm that acts as an underwriter. This firm then proceeds to determine the various financial and legal details behind the IPO.
The filing company must also submit a preliminary registration statement. This statement outlines the specifics and prospects of the company's shares. This statement is typically considered to be informational in nature and is not final.
A finalized statement and prospectus are also filed to appropriate governing and regulatory bodies. Once the statement and initial stock issue price is approved, the company is then able to proceed with its IPO.
After a company's IPO, its stocks are considered to have entered the secondary market. This secondary market refers to stocks traded between investors. In the secondary market, securities that have been issued can be traded without the original company's involvement in process.Learn more about Economics
Shares of apparel manufacturer Under Armour, Inc., raised $157 million at the company's initial public offering in November 2005 and then grew in value over the next decade and a half to a market capitalization of $22 billion by October 2015, according to MarketWatch and Yahoo Finance. The company's stock achieved a significant milestone in April 2014, when Under Armour became a component of the Standard & Poor's 500 stock index.Full Answer >
According to Investopedia, the market value of equity is calculated by multiplying the number of a company's outstanding shares by the current price for which the stock is sold. If either the price of the stock or the number of outstanding shares changes, so does the market value of equity.Full Answer >
Pricing policy refers to the way a company sets the prices of its services and products basing on their value, demand, cost of production and the market competition. Pricing policy is essential for all companies as it provides a guideline for creating profits and areas that bring in losses. Pricing policy goes hand in hand with pricing strategy.Full Answer >
Advantages of exporting include increased sales, gaining global market shares, diversification, lower cost per unit and expansion within the company. Disadvantages include extra costs, the possibility of needing to change products, payment collection complications and difficulties in getting reliable market information.Full Answer >