Discuss the purpose of the primary and secondary markets, and how each functions. Explain how the secondary market supports the function of the primary market, and how financial market turmoil (e.g. 2008-09) impedes this.

Primary market is a part of capital market which will be used by companies to issue fresh equity shares and it will be used for or making fresh capital raising.

Secondary market is another part of the capital market which will be offering with the trading of the securities regularly and it will also help in raising of the capital.

Primary market will help the company in order to issue the fresh equity shares into the market and it will help the company in order to find out various subscribers will be subscribing out and will help the company in order to raise the capital from the first issues of sales.

Secondary market will be providing with the continuous trading of shares by proper interaction of demand and supply and second market will help the individual investors in order to maximize the rate of return and it will help the companies in order to find out their actual work and market consensus.

Secondary markets are helping the primary market in order to operate in a better manner because secondary market will reflect the sentiment and mood of the investors and common consensus of the market which will have the various companies to issue shares at higher price or lower price respectively according to the changing sentiments into the market.

2008 market turmoil reflect that companies were sceptical to list themselves into the market and they were not raising up capital with initial public offering because people were highly sceptical to invest and companies were hardly having any positional bargain, so it was all reflected through the secondary market collapse and there was lack of initial public offering in the primary market.