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Chapter 5: Q9DQ (page 471)

Why is secondary trading in the security markets important?

Short Answer

Expert verified

Secondary trading facilitates investors with liquidity.

Step by step solution

01

Secondary trading

Secondary trading refers to thetrading of securities that have already been issued in primary markets. In secondary market, investors trade in the securities they already own.

02

Importance of secondary trading

Secondary trading brings liquidity in secondary markets because they trade in already-issued securities. In addition, secondary trading makes the prices of security investments competitive.

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