The document discusses two types of secondary markets:
1) Exchange markets where buyers and sellers meet in a central location, such as the New York Stock Exchange, to conduct trades.
2) Over-the-counter (OTC) markets where dealers at different locations trade via computer and telephone networks, such as NASDAQ and the US government bond market, without a central exchange. OTC dealers have inventories of securities and set prices competitively via computer networks.
The document discusses two types of secondary markets:
1) Exchange markets where buyers and sellers meet in a central location, such as the New York Stock Exchange, to conduct trades.
2) Over-the-counter (OTC) markets where dealers at different locations trade via computer and telephone networks, such as NASDAQ and the US government bond market, without a central exchange. OTC dealers have inventories of securities and set prices competitively via computer networks.
The document discusses two types of secondary markets:
1) Exchange markets where buyers and sellers meet in a central location, such as the New York Stock Exchange, to conduct trades.
2) Over-the-counter (OTC) markets where dealers at different locations trade via computer and telephone networks, such as NASDAQ and the US government bond market, without a central exchange. OTC dealers have inventories of securities and set prices competitively via computer networks.
MARKET Exchange = buyers & sellers meet in a central location. Example: New York Stock Exchange.
Over-the-Counter (OTC) Market = dealers at
different locations trade via computer and telephone networks. Examples: NASDAQ (National Association of Securities Dealers Automated Quotation System); US Government bond market. Secondary market can be organised in 2 ways: Buyers & sellers of securities (or agents or brokers) meet in 1 central location to conduct trades. New York and American stock exchanges for stocks and Exchange Chicago Board of Trade for commodities (wheat, corn, silver and other raw materials).
Dealers at different locations who have an inventory
of securities stand ready to buy and sell securities over-the-counter to anyone who comes to them and is willing to accept their prices. Over-the Because OTC dealers are in computer contact and know the prices set by one another. encounter (OTC) OTC market is very competitive and not very different from a market with an organized exchange.