Secondary Market

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Definition of 'Secondary Market'

The secondary market is a marketplace where previously issued securities, such as stocks, bonds, and other financial instruments, are bought and sold. The primary market is where new securities are issued directly from the issuer to investors. The secondary market is where existing securities are traded between investors.

The secondary market is an important part of the financial system because it allows investors to buy and sell securities after they have been issued. This provides liquidity to the market and makes it easier for investors to trade securities. The secondary market also provides price discovery, which is the process of determining the fair value of a security.

There are a number of different types of secondary markets. The most common type of secondary market is the stock market, where stocks are traded. Other types of secondary markets include the bond market, the commodities market, and the foreign exchange market.

The secondary market plays an important role in the economy by providing liquidity to the financial system and helping to price securities. It also allows investors to trade securities after they have been issued, which can be beneficial for both investors and issuers.

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