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An Introduction to Trading in the Financial Markets: Market Basics by R. Tee Williams

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2

Secondary Markets

Secondary markets do not raise money for the companies or governments that issue securities (see Figure 3.2). Instead, the secondary markets provide the facility to allow a current owner of a security to sell it if the owner no longer wants the security. In contrast, someone else who would now like to own the security can buy it from the seller in the secondary market.

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Figure 3.2 The secondary markets permit securities created in the primary markets, and other instruments created in other ways, to be exchanged among investors and traders.

When an outstanding security or instrument trades, no money goes to the company or government ...

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