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

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Introduction

We use the term “markets” to refer to the creation and trading of securities and other traded instruments. Marketplaces are the venues where instruments that have been created and issued to the public are exchanged between buyer and seller. We can categorize markets in several different ways, but there are two basic types of markets for traded instruments.

The primary market is where securities are created. The secondary market is where instruments are traded after they have been issued. Figure 3 contrasts the primary market that raises capital for entities that need financing by issuing securities primarily, with the secondary market that permits holders of instruments to purchase or sell instruments that are already outstanding. ...

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