Secondary Market

Published: | Updated: July 15, 2017

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Definition - What does Secondary Market mean?

The secondary market refers to the situation in which the first customers of a financial product trade that product to another set of customers. This is popularly known as the stock market, where stocks or other securities were originally bought from companies in an initial public offering or IPO.

It is also known as the aftermarket.

Insuranceopedia explains Secondary Market

Some of the financial products bought and sold in this market are notes, company shares, bonds, and stocks. It is called secondary because all of these products were previously sold.

The first market is the trading of initial public offerings by companies or financial institutions. The prices of financial products sold in the first market are announced beforehand and are not subject to change. The secondary marketing, on the other hand, is affected by demand and, as a result, the prices of financial products might differ from their prices in the IPO.

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