ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Bonds can be bought and sold in the “secondary market” after they are issued. While some bonds are traded publicly through exchanges, most trade over-the-counter between large broker-dealers acting on their clients’ or their own behalf. A bond’s price and yield determine its value in the secondary market.

Detailed explanation-2: -Unlike shares of a company that trade on stock exchanges, most corporate bonds trade over-the-counter (OTC). This is because bonds come from several different issuers, and each issuer will have several bonds offered-with different maturity, coupon, nominal value, and credit rating.

Detailed explanation-3: -Over-the-counter (OTC) securities are securities that are not listed on a major exchange in the United States and are instead traded via a broker-dealer network, usually because many are smaller companies and do not meet the requirements to be listed on a formal exchange.

Detailed explanation-4: -over-the-counter market, trading in stocks and bonds that does not take place on stock exchanges. It is most significant in the United States, where requirements for listing stocks on the exchanges are quite strict.

Detailed explanation-5: -Examples of over-the-counter stocks and securities include derivatives (especially non-standardized), foreign currency, ADRs, and new issues.