- CFA Exams
- 2024 Level I
- Topic 6. Equity Investments
- Learning Module 1. Market Organization and Structure
- Subject 7. Secondary Security Market and Contract Market Structures
Why should I choose AnalystNotes?
Simply put: AnalystNotes offers the best value and the best product available to help you pass your exams.
Subject 7. Secondary Security Market and Contract Market Structures PDF Download
The secondary markets permit trading in outstanding issues; that is, stocks or bonds already sold to the public are traded between current and potential owners.
- The existing owner sells to another party.
- The issuing firm does not receive proceeds and is not directly involved.
Secondary markets support primary markets.
Securities exchanges differ in when stocks are traded.
In a call market, trading for individual stocks takes place at specified times. The intent is to gather all the bids and asks for the stock and attempt to arrive at a single price where the quantity demanded is as close as possible to the quantity supplied.
In a continuous market, trades occur any time the market is open. Stocks are priced either by auction or by dealers. In an auction market, there are sufficient willing buyers and sellers to keep the market continuous. In a dealer market, enough dealers are willing to buy or sell the stock.
Please note that dealers may exist in some auction markets. These dealers provide temporary liquidity and ensure market continuity if the market does not have enough activity.
Although many exchanges are considered continuous, they (e.g., NYSE) also employ a call-market mechanism on specific occasions.
User Contributed Comments 1
|khalifa92||only trading sessions? where are the execution mechanisms>?<|
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
My Own Flashcard
No flashcard found. Add a private flashcard for the subject.