If you decide to take advantage of that hot stock tip you just heard about from your roommate, you may need to interact with a securities company. Similarly as the new CFO of WWCF, a candy manufacturer, you may need a securities company if you are asked to coordinate a bond sale or to issue additional stock. If your grandfather decides to sell his firm to the public, you may need to help him by working with investment bankers at that securities company. Finally, if you are looking for capital to grow a small, but successful, start up company, you may need the help of a venture capital firm. The smooth functioning of securities markets, in which bonds and stocks are traded, involves several financial institutions, including securities brokers and dealers, investment banks, and venture capital firms. None of these institutions were included in our list of financial intermediaries in Chapter 2 because they do not perform the intermediation function of acquiring funds by issuing liabilities and then using the funds to acquire financial assets. Nonetheless, they are important in the process of channeling funds from savers to spenders. To begin our look at how securities markets work, recall the distinction between primary and secondary securities markets discussed in Chapter 2. In a primary market, new issues of a security are sold to buyers by the corporation or government agency ultimately using the funds. A secondary market then trades the securities that have been sold in the primary market (and so are secondhand). Investment banks assist in the initial sale of securities in the primary market; securities brokers and dealers assist in the trading of securities in the secondary markets. Finally, venture capital firms provide funds to companies not yet ready to sell securities to the public.