Secondary Market
A secondary market is where securities are traded among investors after the initial issuance in the primary market. Common examples include stock exchanges where shares of public companies are bought and sold. The secondary market provides liquidity for investors, enabling them to sell their holdings and realize gains or manage risk. It plays a critical role in the overall functioning of capital markets by facilitating price discovery and investor access.
Key Takeaways
- Enables trading of securities after their initial issuance.
- Provides liquidity and access to investors.
- Common in stock exchanges and bond markets.
- Critical for price discovery in capital markets.
