Secondary Market

Definition

• A financial market, such as the NYSE, NASDAQ, TSE, or TSX, where previously issued financial instruments are purchased and sold to investors in the form of stocks, bonds, options and futures. Also known as an "aftermarket." The term "secondary market" is also used in conjunction with mortgage banks and the loans they sell to investors or can also be used to describe any market that sells second-hand goods or assets.

Synonyms
equity market, stock exchange, stock market, aftermarket

Related Terms and Acronyms

• Asset — Definition,
  • Anything of monetary value that is owned by a person. Assets include real property, personal property, and enforceable claims against others including bank accounts, stocks, mutual funds, and so on.
• Asset-Backed Securities (ABS) — Acronym, Very Important,
  • Securities backed by a pool of assets.
  ➥ Financial security made up of a bundle of assets.
• Buyer's Market — Definition,
  • When market conditions favour the buyer.
• Common Stock (CS) — Acronym,
  • A security that allocates partial ownership in a corporation, but at a lower standing than preferred stocks.
• Derivatives — Definition,
  • Financial contracts whose value is derived from the value of some underlying asset, rate or index. Derivatives are used as risk-management tools by governments and corporations to reduce exposure to risk, mainly related to fluctuations in foreign-exchange and interest rates. Derivative instruments include swaps, options, futures and forward contracts and are used by banks in two principal activities: sales/trading and asset/liability management.
• Futures — Definition,
  • Contracts to buy something in the future at a price agreed upon in advance. They first developed in the agriculture commodity markets but often involve foreign exchange, Eurodollar deposits and government bonds.
• Incorporated Business — Definition,
  • A company that exists as a corporation.
• Index — Definition,
  • A table of yields or interest rates being paid on debt (such as Treasury notes or bank deposits) that is used to determine interest-rate changes.
• Indexed Annuity — Definition,
  • An annuity where investment performance is pegged to a stock index.
• Inflation-Protected Annuity — Definition,
  • An annuity that guarantees a return equal to or above inflation.
• Intangible Property — Definition,
  • Property that does not have value itself, but represents something else. Stocks, bonds and franchises are examples of intangible property. Business furniture and equipment are examples of tangible personal property.
• Lloyd's of London — Company,
  • A market for insurance and reinsurance based in London, England where Lloyd's members, underwriters and financial backers can spread and share risk.
• Lloyd's Syndicates — Definition,
  • A group of Lloyd's of London underwriters.
• Mortgage-Backed Securities — Definition, Important,
  • Securities backed by mortgage debt.
• Non-liquid Asset — Definition,
  • A possession that can't be transformed readily into cash. Stocks and bonds are liquid assets because they can be sold easily; a house is a non-liquid asset because it takes time to sell.
• Open-end Fund — Definition,
  • A mutual fund that allows investors to buy or sell shares in the fund at their net asset value each business day.
• Portfolio Lender — Definition,
  • A company that underwrites mortgage loans and keeps them on the books instead of selling them on the secondary market.
• Preferred Stock — Definition,
  • A type of security that signifies part ownership in a corporation and is given preferential treatment over common stocks.
• Publicly Traded Company — Definition,
  • A company that is sold on a stock exchange.
• Reinsurance — Definition,
  • The process of one insurance company sharing liabilities from an insurance policy with another insurance company in order to lessen exposure, or in other words, insurance for insurers.
• Secondary Mortgage Market — Definition, Important,
  • The trade in home loans that are bundled together and sold as securities to investors. It frees money so more people can get mortgages.
• Security — Definition,
  • Property designated as collateral.
  • A document stating ownership of a stock or bond.
  • A tradable financial implement that represents ownership, the rights to ownership or debt.
• Seller's Market — Definition,
  • Due to either low supply or high demand, the seller can expect to sell quickly with a high sale price.
• Stock — Definition,
  • A share of the ownership of a company.
• Underwriter — Definition,
  • An entity that issues and distributes financial products including equity capital, credit, mortgages, and insurance.
• Underwriting (UW) — Acronym, Important,
  • The analysis of risk involved in making a mortgage loan to determine whether the risk is acceptable to the lender. Underwriting involves evaluating the property as outlined in the appraisal report, and also evaluating the borrower's ability and willingness to repay the loan.
  • Assessing individuals for eligibility and issuing and distributing a financial product such as insurance, equity capital or credit.