What is the secondary market?
The secondary market is a financial market where investors buy and sell financial products directly from each other, rather than organizations and companies that issue financial instruments. The term "secondary market" or "spare part" is also used to refer in general to any market where people buy and sell goods that have previously sold; For example, a live secondary market for books can be found in used bookstores around the world.
On the other hand, on the primary market, people buy products directly from the company that issues them. For example, if the company creates an initial offer of equity shares, investors can buy shares directly from the company. The investor could then turn and sell shares he bought on the secondary market and pocket profits. Primary markets are used to increase capital, while secondary markets are used by investors to maintain their assets as liquid as possible.
Secondary markets exist for Ashirocous range of financial products, including shares, debtPiS and mortgages. One of the problems with secondary markets is that products can change their hands so many times, that it is difficult to watch the real owner. This can be a particularly big problem with secondary mortgages markets that classically include the sale of bulk mortgage packages. Debtors may not be sure who owns mortgages and where to drive payments, while the holders of mortgages can actually lose physical evidence that their own mortgage remark.
Exchange are a well -known example of a secondary market. On the stock exchange, investors trade directly to each other. Stock prices are rising and falling in response to supply and demand. In this case, the value of traded shares can directly affect the value of the company, but the company actually did not get or lost from the sale of shares. Manufacna, for example, Terer Widgets can find out that its profits increase when it becomes announced by a new product, which leads to an increase in stock prices, thereforeThat investors are growing more confident, but the sale of stocks on the secondary market does not increase capital for manufacturers.
primary and secondary markets are often closely related and decreases in one can control decreases in the other. Total financial trends can also become problematic for either the market, although primary and secondary markets can be affected by different ways. The large size of such markets can also become a serious problem, as small financial problems can increase with panic that reduces the overall market value.