Question

The market where existing securities are traded is known as :

• A. Both Primary and Secondary Market
• B. Primary Market
• C. Secondary Market
• D. Money Market

Hint:

The market where already issued securities are bought and sold among investors is the secondary market, such as a stock exchange.

Answer 1

The Correct Option is C

Step 1: Recall the two parts of the capital market:
The primary market is where new securities are issued by companies for the first time. The secondary market is where securities that are already issued are bought and sold.
The question asks for the market where existing securities are traded.

Step 2: Why option (3) Secondary Market is correct:
The secondary market is also called the stock market. Investors trade shares among themselves there. The company does not receive money from these deals.
The stock exchange is the best known example of this market.

Step 3: Why option (1) is wrong:
Both markets do not trade existing securities. The primary market deals only with new issues.

Step 4: Why option (2) is wrong:
The primary market is the new issues market. Securities are sold for the first time there, so they are not existing securities.

Step 5: Why option (4) is wrong:
The money market deals in short-term instruments with maturity up to one year. It is not the market for trading existing shares and bonds.

Final Answer:
The market for existing securities is the Secondary Market, option (3).