The stock exchange market primarily deals with the sales of second-hand securities. In this context, "second-hand securities" refer to financial instruments such as stocks and bonds that have already been issued by a company and are currently being traded among investors. When a company first issues stocks or bonds, it is done in the primary market. Once these securities are purchased and then resold by investors, they are traded in the secondary market, commonly known as the stock exchange.
Here's a simple rundown of how it works:
1. **Initial Offering:** A company looking to raise capital might issue stocks or bonds to investors. This takes place in the primary market through an Initial Public Offering (IPO) or similar mechanisms.
2. **Secondary Trading:** Once issued, these securities can be bought and sold on the stock exchange. Investors trade these securities based on supply and demand, trying to make a profit by buying low and selling high.
Therefore, the stock exchange acts as a platform where buyers and sellers meet to trade these second-hand securities. This buying and selling provide the liquidity required for the market to function efficiently and helps in price discovery of the securities based on market demand.