Re:The Crash of ’87, from the Wall Street Players Who Lived It
by sokoloff on Tuesday October 17, 2017 @08:53AM
(#15490489)
Same reason that a $100 bill is worth more than a $100 gift card to a specific store.
The presence of the secondary market makes the initial offering (sales) of shares easier.
Imagine company A is making a primary offering (direct sales of shares from the company to an investor), but that those shares do not have a ready secondary market.
Imagine company B is making the same primary offering, but there is a deeply liquid secondary market.
Company A and Company B are otherwise identical (line of business, revenue, profit, outlook for the future, etc). Investors will much more readily invest in company B.
The presence of the secondary market makes the initial offering (sales) of shares easier.
Imagine company A is making a primary offering (direct sales of shares from the company to an investor), but that those shares do not have a ready secondary market.
Imagine company B is making the same primary offering, but there is a deeply liquid secondary market.
Company A and Company B are otherwise identical (line of business, revenue, profit, outlook for the future, etc). Investors will much more readily invest in company B.