Knowra Secondary market Secondary market A secondary market is where investors trade financial assets that have already been issued. Trades transfer ownership between investors rather than raising new capital for the issuer.
Stock exchange : An organized venue where securities are listed and traded under established rules. Exchanges provide a central, regulated setting for many secondary-market trades.
Primary market : The market where issuers sell newly created securities to investors. Unlike secondary trading, primary-market sales provide funds directly to the issuer.
Common stock : An equity security representing ownership in a corporation, usually with voting rights and a residual claim on assets. Publicly traded common stock is a familiar asset exchanged in secondary markets.
Cost of capital : The return a company or project must offer to attract financing, reflecting the cost of its funding sources. Liquid resale markets can make investors more willing to buy new issues, affecting financing costs.
Over-the-counter market : A decentralized market where parties trade directly or through dealers rather than on a centralized exchange. It shows how secondary trading can occur without an exchange order book.
Initial public offering : A company's first sale of shares to the public through a public offering. An IPO is a primary-market event that can precede exchange trading.
Corporate bond : A debt security issued by a company that promises interest payments and repayment of principal. Bondholders can resell corporate debt without changing the issuer's original financing.
Investor protection : Laws, regulations, and practices designed to safeguard investors from fraud and unfair treatment. Secondary trading depends on rules governing disclosure, market conduct, and fair execution.
Bid–ask spread : The difference between the highest price a buyer will pay and the lowest price a seller will accept. The spread is a direct cost of executing trades in many secondary markets.
Private placement : The sale of securities directly to a limited group of investors, usually without a public offering. Private placements illustrate issuance outside public secondary-market venues.
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