Investors trade previously issued securities in the ________ market(s).

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Question restatement: Investors trade previously issued securities in the ________ market(s).

Option a: primary. The primary market is where new securities are issued and sold for the first time, typically through an initial public offering or a private placement. Investors do not trade already issued shares here; instead, the proceeds go to the issuer. Therefore this choice describes the wrong market for trading previously issued securities.

Option b: secondary. The secondary market is precisely the arena where investors trade securities that have already been issued. This includes stock exchanges and over-the-counter markets where shares, bonds, and other instruments change hands between investors after the initial issuance. This choice aligns with the standard definition of secondary market activity.

Option c: primary and secondary. While both markets exist, the phrase "previously issued securities" specifically points to the secondary market. The primary market is involved when new securities are issued, not when they are traded after issuance. Thus this combined option is not accurate for the given description.

Option d: derivatives. Derivatives are financial instruments whose value derives from an underlying asset. They are not the general venue for trading previously issued securities themselves; instead, they are contracts based on securities, commodities, or other assets. This makes this option incorrect for the stated scenario.

Option e: money. The money market deals with short-term debt instruments and cash equivalents, not the trading of previously issued equity or long-term securities. While money market instruments exist, they are not the space where typical previously issued securities are traded, so this choice is not correct.

In summary, each option was evaluated against the concept of where investors trade securities after issuance. The description given in the question corresponds best to the secondary market, where existing securities are actively traded among investors after initial issuance.

FINS5513-Investments & Portfolio Sel. - T3 2025

Investors trade previously issued securities in the ________ market(s).

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