Secondary market

[3] The secondary market can be for a variety of assets, that can vary from stocks to loans, from fragmented to centralized, and from illiquid to very liquid.

[4] Another usage of "secondary market" is to refer to loans which are sold by a mortgage bank to investors such as Fannie Mae and Freddie Mac.

[citation needed] Accurate share price allocates scarce capital more efficiently when new projects are financed through a new primary market offering, but accuracy may also matter in the secondary market because: 1) price accuracy can reduce the agency costs of management, and make hostile takeover a less risky proposition and thus move capital into the hands of better managers; and 2) accurate share price aids the efficient allocation of debt finance whether debt offerings or institutional borrowing.

[7] Similarly, secondary markets can be said to exist in some real estate contexts as well (e.g., ownership shares of time-share vacation homes are bought and sold outside of the official exchange set up by the timeshare issuers).

These have very similar functions as secondary stock and bond markets in allowing for speculation, providing liquidity, and financing through securitization.