Financial Markets – Primary Markets and Secondary Markets
Financial markets come in a variety of flavors to accommodate the wide array of financial instruments or securities that have been found beneficial to both borrowers and lenders over the years.
Primary markets are where newly created (issued) instruments are sold for the first time.
Most securities are negotiable. In other words, they can be sold to other investors at will in what are called secondary markets.
Financial markets can be categorized or grouped by issuance (primary versus secondary markets), type of instrument (stock, bond, derivative), or market organization (exchange or OTC).
Most capital market instruments, including mortgages (loans on real estate collateral), corporate bonds, government bonds, and commercial and consumer loans, have fixed maturities ranging from a year to several hundred years, though most capital market instruments issued today have maturities of thirty years or less.
Financial instruments can be grouped by time to maturity (money versus capital) or type of obligation (stock, bond, derivative).
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