Final answer:
Investment dealers act as intermediaries in the primary market by facilitating the issuance of securities on behalf of companies. They help determine the price, prepare legal documents, and manage the marketing and distribution of the securities to potential investors.
Step-by-step explanation:
Investment dealers act as agents in the primary market by facilitating the issuance of securities on behalf of companies. They help companies sell stocks or bonds to raise capital. Investment dealers act as intermediaries between the company issuing the securities (the issuer) and the investors who want to buy them.
For example, when a company wants to go public and sell shares to the public for the first time, they enlist the services of an investment dealer. The investment dealer helps the company determine the appropriate price for the shares, prepares the necessary legal documents, and manages the marketing and distribution of the shares to potential investors.
By acting as agents, investment dealers provide valuable services to companies and investors in the primary market, facilitating the flow of financial capital and enabling companies to raise the funds they need for growth and expansion.