What market is defined as where previously issued shares are bought and sold?

What market is defined as where previously issued shares are bought and sold?

• A. Primary Market
• B. Secondary Market
• C. Tertiary Market
• D. Over-the-Counter Market

Answer: (B)

Trading of existing shares among investors happens in the secondary market. In this market, previously issued securities are bought and sold after their initial offering, with prices determined by supply and demand and with liquidity for investors who want to exit their positions. The issuer does not receive funds from these trades—the buyer pays another investor directly. By contrast, the primary market is where new securities are issued to raise capital. The over-the-counter market is a network of dealers that trades securities outside formal exchanges and is still part of secondary market activity, while the tertiary market is not a standard term used for this concept.

Trading of existing shares among investors happens in the secondary market. In this market, previously issued securities are bought and sold after their initial offering, with prices determined by supply and demand and with liquidity for investors who want to exit their positions. The issuer does not receive funds from these trades—the buyer pays another investor directly. By contrast, the primary market is where new securities are issued to raise capital. The over-the-counter market is a network of dealers that trades securities outside formal exchanges and is still part of secondary market activity, while the tertiary market is not a standard term used for this concept.