Certified Management Accountant 2026 – 400 Free Practice Questions to Pass the Exam

The secondary market is defined as the market where previously issued securities are traded. This distinguishing feature sets it apart from the primary market, where newly issued securities are sold directly by companies to investors for the first time. In the secondary market, these securities can be bought and sold multiple times among investors, providing liquidity and allowing for price discovery based on supply and demand.

The ability to trade existing securities in this market is crucial for investors, as it allows them to liquidate their investments or adjust their portfolios without having to wait for a company's new issues. This market includes various trading platforms, such as stock exchanges and over-the-counter markets, where stocks, bonds, and other financial instruments are exchanged after their initial issuance.

The other options do not accurately represent the secondary market. The initial sale of new securities pertains to the primary market, while the mention of government bonds or commodities describes specific segments of the financial market rather than the broad function of the secondary market itself.