This presentation explains Secondary Markets which is a part of the subject Financial Management. This presentation is allied to basic concepts.

2.  The secondary market is defined as the market where the
securities issued in the primary market are bought and sold.
 The secondary market is actually formed by investors who
deal with primary market investor to buy and sell financial
securities such as bonds, futures and stocks.
 The national exchanges, such as the Bombay Stock Exchange
(BSE), National Stock Exchange(NSE), New York Stock
Exchange (NYSE) and the NASDAQ, are secondary markets.

3. Secondary
Markets
Auction
Market
Dealer
Market

4.  An auction market is a market in which buyers
enter competitive bids, and sellers enter competitive offers at
the same time.
 The price at which a stock is traded represents the highest
price that a buyer is willing to pay and the lowest price that
a seller is willing to sell.
 Matching bids and offers are then paired together, and the
orders are executed.
 Example : NYSE (New York Stock Exchange)

5.  A dealer market is a financial market mechanism where
multiple dealers post prices at which they will buy or sell a
specific security of instrument.
 In a dealer market, a dealer/market maker”
provides liquidity and transparency by electronically
displaying the prices at which it is willing to make a market in
a security, indicating the “bid” price and the “offer” price.
 Example : NASDAQ (National Association
of Securities Dealers Automated Quotations

6.  Equity
 Security Receipts
 Government Securities
 Debentures
 Bonds
 Commercial Paper
 Treasury Bills

7.  A stock or any other security representing an ownership
interest. The various kinds of equity shares are :
• Equity Shares
• Right Issues / Right Shares
• Bonus Shares
• Preferred Stocks/Preference Shares

8.  Security receipt means a receipt or other security, issued by a
securitization company or reconstruction company to any
qualified institutional buyer pursuant to a scheme, evidencing
the purchase or acquisition by the holder thereof, of an
undivided right, title or interest in the financial asset involved
in securitization.

9.  A government security is a bond issued by a government
authority with a promise of repayment upon maturity.
 Government securities such as savings bonds, treasury
bills and notes also promise periodic coupon or interest
payments.
 These securities are considered low-risk, since they are
backed by the taxing power of the government.

10.  A debenture is a type of debt instrument that is not secured
by physical assets or collateral.
 Debentures are backed only by the
general creditworthiness and reputation of the issuer.
 Both corporations and governments frequently issue this type
of bond to secure capital. Like other types of bonds,
debentures are documented in an indenture.

11.  A bond is a debt investment in which an investor loans money
to an entity (typically corporate or governmental) which
borrows the funds for a defined period of time at a variable
or fixed interest rate.
 Bonds are used by companies, municipalities, states and
sovereign governments to raise money and finance a variety
of projects and activities.
 Owners of bonds are debt holders, or creditors, of the issuer.

12.  Commercial paper is an unsecured, short-term debt instrument
issued by a corporation, typically for the financing of accounts
receivable, inventories and meeting short-term liabilities.
 Maturities on commercial paper rarely range any longer than
270 days.
 Commercial paper is usually issued at a discount from face
value and reflects prevailing market interest rates.

13.  Treasury Bills are short term (up to one year) borrowing
instruments of the Government of India which enable
investors to park their short term surplus funds while reducing
their market risk.
 They are auctioned by Reserve Bank of India at regular
intervals and issued at a discount to face value.

14.  Buyback of Shares
 Corporate Action
 Index
 Sensex

15.  A buyback, also known as a repurchase, is the purchase by a
company of its outstanding shares that reduces the number of
its shares on the open market.
 This system is regulated by SEBI and Company Act. The
provisions regulating buyback are contained under the
companies Act 1956 which were amended in 1999.

16. 1. To increase promoters holdings.
2. To increase earning per share.
3. Rationalize the capital structure by writing off capital not
represented by available assets.
4. To support share value.
5. To pay surplus cash not required by business.

17.  A corporate action is any event that brings material change to
a company and affects its stakeholders, including
shareholders, both common and preferred, as well as
bondholders.
 These events are generally approved by the company's board
of directors; shareholders may be permitted to vote on some
events as well. Some corporate actions require shareholders to
submit a response.
 Corporate action may include declaration of dividend, issue of
bonus shares, splitting shares into smaller denominations etc.,
such actions impact the market price of the shares.

18.  Index is an indication of market trend, showing specified
portfolio of share price’s movements.
 It is a basket of securities and the average price movement of
the basket securities indicates the index movement.

19.  Sensex is an index based on shares traded on the Bombay
Stock Exchange. The Sensex and the NIFTY (National Fifty)
are barometers of the Indian market.