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Securities Market

The securities market is a marketplace where financial instruments, such as stocks, bonds, and derivatives, are issued, bought, and sold. Securities markets can be divided into primary markets, where new securities are issued and sold to investors, and secondary markets, where existing securities are traded among investors. The securities market plays a crucial role in capital formation, allowing companies to raise funds and investors to trade assets in a regulated environment.

Example

Investors buy and sell shares of publicly traded companies on the New York Stock Exchange (NYSE), a major secondary market for securities.

Key points

• A marketplace for issuing, buying, and selling financial instruments like stocks, bonds, and derivatives.

• Divided into primary markets (new securities) and secondary markets (existing securities).

• Facilitates capital formation and allows investors to trade securities in a regulated environment.

Quick Answers to Curious Questions

In the primary market, new securities are issued, while in the secondary market, existing securities are traded among investors.

It allows companies to raise funds by issuing securities, enabling businesses to grow and investors to participate in capital markets.

Common securities include stocks, bonds, options, and other financial instruments.

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