What distinguishes the secondary market?

The secondary market is characterized by the trading of existing financial securities among investors. This means that after securities such as stocks or bonds have been issued in the primary market, they can be bought and sold by investors in the secondary market. This trading allows investors to exchange securities without the involvement of the issuing companies.

This market plays a critical role in providing liquidity, as it enables investors to easily enter and exit investments. The prices of securities in the secondary market fluctuate based on supply and demand, reflecting changes in market sentiment and the perceived value of the underlying assets.

The other options describe other types of markets. The primary market is where newly issued stocks or bonds are sold for the first time, commodities and physical goods are typically traded in separate markets, and while bonds are indeed traded in the secondary market, there is no exclusivity to bond trading, as stocks and other financial instruments are also actively traded.