Which of the following statements best describes the secondary market?

The secondary market refers to the platform where previously issued securities, such as stocks and bonds, are bought and sold among investors. Unlike the primary market, which is focused on the issuance of new securities directly from companies to investors, the secondary market deals exclusively with securities that have already been issued and are being traded by investors.

This trading can take place on stock exchanges or over-the-counter (OTC), and it facilitates liquidity, allowing investors to buy and sell their investments easily. The secondary market plays a crucial role in price discovery, providing a way for market participants to assess the value of their investments based on supply and demand dynamics.

In contrast, the other options refer to different aspects of the financial markets. One option mentions the issuance of new securities, which pertains to the primary market. Another option restricts the scope to treasury bonds, which is too narrow since the secondary market encompasses a wide range of securities beyond just treasury bonds. The final option focuses on IPOs, which again relates to the primary market, as IPOs (Initial Public Offerings) are the processes through which new shares are offered to the public for the first time. Thus, the correct description of the secondary market is that it involves the trading of existing stocks and bonds.