How is the 'secondary market' best described?

The secondary market is best described as the marketplace where previously issued securities—such as stocks and bonds—are bought and sold among investors. In this context, it supports liquidity and provides investors with the ability to trade their securities without needing to wait for the original issuer to buy them back. This market plays a crucial role in the overall financial system by enabling price discovery and allowing investors to realize gains or losses on their investments based on current market conditions.

By facilitating trading between investors, the secondary market also helps to establish the ongoing value of a security, reflecting changes in demand, interest rates, and overall economic conditions. Trading in this market does not involve the issuing companies directly; instead, it involves transactions between investors, making it distinct from primary market activities, where new securities are created and sold to investors for the first time.