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Secondary Market

The secondary market refers to the marketplace where investors buy and sell previously issued securities, such as stocks, bonds, and other financial instruments. Unlike the primary market, where securities are initially issued and sold to the public, the secondary market facilitates trading between investors. Stock exchanges like the New York Stock Exchange (NYSE) and NASDAQ are examples of secondary markets. The secondary market provides liquidity and enables investors to trade securities without involving the issuing company.

Example

An investor purchases shares of a company on the secondary market by trading on the NYSE after the company has already gone public.

Key points

• The marketplace where previously issued securities are bought and sold between investors.

• Stock exchanges like the NYSE and NASDAQ are examples of secondary markets.

• Provides liquidity and allows investors to trade securities without involving the issuing company.

Quick Answers to Curious Questions

In the secondary market, investors trade existing securities, while in the primary market, securities are sold for the first time by the issuing company.

It provides liquidity, allowing investors to buy and sell securities easily and efficiently, without waiting for new issues from companies.

Common securities traded include stocks, bonds, and other financial instruments that have been previously issued.