What is Secondary Market?
Secondary market is defined as a platform where investors buy and sell financial instruments (like stocks, bonds, and other securities). It is also known as the Aftermarket as this is where the second stage of the financial instruments take place after issuing for the first time in the primary market. Here, trading takes place between traders and other investors instead of the entities who issue their securities. Usually, people associate the stock market with the secondary market.
Geeky Takeaways:
- Secondary market trade securities that were earlier sold in the primary market.
- The trade happens among the investors instead of directly selling by the issuing company.
- This market offers liquidity to the investors, facilitating the selling of securities easily and quickly if the investors need money.
- In addition to this, the secondary market allows investors to purchase securities to enhance their portfolio, modify their asset allocation, and hedge against market risks.
Table of Content
- Functions of Secondary Market
- How does the Secondary Market Work?
- Types of Secondary Market
- Importance of Secondary Market
- Different Instruments in the Secondary Market
- Advantages of Secondary Market
- Disadvantages of Secondary Market
- Difference Between Secondary Market and Primary Market