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Secondary Markets:Role & Functions

The secondary market allows previously issued securities like stocks, bonds, and futures to be traded between investors, providing liquidity to the capital markets. It plays a vital role by increasing tradability of securities and flow of funds, allowing profits through speculation, and using market forces to potentially increase stock prices and create value. Secondary markets also help monitor the economy and prevent consumer assets from being tied up in just one holding.

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142 views1 page

Secondary Markets:Role & Functions

The secondary market allows previously issued securities like stocks, bonds, and futures to be traded between investors, providing liquidity to the capital markets. It plays a vital role by increasing tradability of securities and flow of funds, allowing profits through speculation, and using market forces to potentially increase stock prices and create value. Secondary markets also help monitor the economy and prevent consumer assets from being tied up in just one holding.

Uploaded by

adityavik
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as TXT, PDF, TXT or read online on Scribd
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Secondary Markets

The secondary market, also known as the aftermarket, is the financial market whe
re previously issued securities and financial instruments such as stock, bonds,
options, and futures are bought and sold.Simply it is a market for sale and pur
chase of existing securities.

Role and Functions


1)Secondary marketing is vital to an efficient and modern capital market
2)Tradability-In the secondary market, securities are sold by and transferred fr
om one investor or speculator to another.
3)Liquidity-increases the flow of funds in the market and also prevents consumer
s from being tied up with one equity
4)Marketability
5)Monitor & control-Reflect the Results in real world.
6)Speculation-Allows for Profits through Speculation-Intraday
7)Circuit filters-Prevents widespread swing in shares by circuit filters at 2,5,
10 and 20 %
8)Value Enhancement-With forces of demand and supply, Stock prices of shares ris
e creating value
9)General indicator of Health of Economy-NIFTY and SENSEX generally indicate how
the economy is doing is general

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