What type of market does the term "secondary market" refer to?

The term "secondary market" specifically refers to a market where previously issued securities are bought and sold among investors. This is distinct from the primary market, where new securities are first offered to the public during initial public offerings (IPOs) or other capital-raising transactions. In the secondary market, the transactions do not involve the issuing company; rather, they occur between investors, and companies do not receive any proceeds from these trades.

This market is vital because it provides liquidity, allowing investors to convert their securities into cash and facilitating price discovery through the forces of supply and demand. Major stock exchanges, such as the New York Stock Exchange and NASDAQ, are examples of well-established secondary markets.

The other options describe different types of markets. The first option refers to the primary market, where new issues are sold directly to investors for the first time. The third option entails markets specifically for derivatives and options, which are financial instruments linked to the value of securities but operate under different rules and contexts. The fourth option mentions commodities, which refers to physical goods traded in their respective markets, rather than securities.