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
stock exchange, aftermarket, stock market, equity market

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 tradable financial implement that represents ownership, the rights to ownership or debt.
    • A document stating ownership of a stock or bond.
  • 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,
    • Assessing individuals for eligibility and issuing and distributing a financial product such as insurance, equity capital or credit.
    • 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.
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