Question

You are working as a financial advisor. One of your clients asked, how securities are sold in secondary market. Give details in this context.

Answer 1

In secondary market, securities are not directly issued by the company to investors. The securities are sold by existing investors to other investors. Sometimes, the investor is in need of cash and another investor wants to buy the shares of the company, that he could not get directly from the company.

Then, both the investors can meet in secondary market and exchange securities for cash through an intermediary called broker.