The Primary Market

What this video covers

• Who receives the proceeds in a primary market transaction versus a secondary market trade, and how to apply the car-from-the-manufacturer analogy under pressure
• The three primary market transactions: initial public offering (IPO), follow-on offering, and municipal bond new issue
• Why a follow-on offering is primary market (issuer gets paid) while a secondary offering is not (existing shareholders get paid)
• The critical distinction between secondary offering (who is selling: existing shareholders) and secondary market (when trading occurs: after initial issuance)
• Which disclosure document applies to which issuer: prospectus for corporate offerings, official statement for municipal bond issues
• What due diligence means for underwriters, and how they earn the spread without touching the issuer's proceeds