Is this a helpful analogy

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Question - One way to think about the difference between primary and secondary financial markets is to think about the housing market. When buying a house, you can either buy it 1) new from a builder or 2) "used" (i.e. existing home), usually through a realtor. Both the new and existing house markets are very active and important for meeting consumer needs. Even if one only buys new houses, the presence of the existing house market provides the liquidity of a secondary market to be able to sell that new house when one is ready to move on to another house. For the many consumers who buy existing homes, the primary market of new houses provides the necessary supply.

What do you think? Is this a helpful analogy? Is one market better than another? Can you think of another example?

Reference no: EM132944459

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