Secondary markets for financial instruments are important because, among other things,
A)they are where companies and governments raise new funds.
B)taxes on trading in these markets are an important source of revenue for governments.
C)they make it easier for investors to hold a diversified portfolio of assets.
D)they provide a place where people interested in financial matters can meet.

Question

Quizplus · Accepted Answer

Secondary markets allow investors to purchase and sell financial instruments already issued in the primary market, providing liquidity and allowing investors to diversify their portfolios. While primary markets are where companies and governments raise new funds, secondary markets do not generate new funds for the issuer. Taxes on trading in these markets may generate revenue for governments, but this is not the primary purpose of secondary markets. While people interested in financial matters may meet in these markets, this is not a significant reason why they are important.

Secondary Markets for Financial Instruments Are Important Because, Among Other