secondary markets

Paraphrasing: Changing the sentence format and syntax, as well as changing the order of sentences, not just changing vocabulary

Why secondary markets are so important to raise capital?


Answer: –


  • A secondary market is any market where owners of outstanding securities can sell them to other investors.
  • Secondary markets are like used-car markets in that they allow investors to buy or sell previously owned securities for cash.
  • Secondary markets are important to corporations as well because investors are willing to pay higher prices for securities in primary markets if the securities have active secondary markets.
  • Thus, companies whose securities have active secondary markets enjoy lower funding costs than similar firms whose securities do not have active secondary markets.
  • Secondary markets are important because they enable investors to convert securities easily to cash.
  • Business firms whose securities are traded in secondary markets are able to issue new securities at a lower cost than they otherwise could because investors are willing to pay a premium price for securities that have secondary markets.


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