(a) Explain the Second Tier Security Market.
(b) Justify the existence of the Second Tier Security market.
Explanation
(a) The second tier security market is the market for buying and selling old and outstanding securities. The introduction of the market is for the development of the country’s economy and to encourage investment opportunities.
(b) The following justify the existence of the Second Tier Security Market ( SSM)
(i) The SSM enables new investors to have direct access to buy shares.
(ii) The SSM aims to serve small and medium-sized companies, some of which have good prospects for growth.
(iii) The SSM enables the investing public to assess the viability and profitability of companies. This enables them to make rational decisions regarding which company to invest in.
(iv) It enables the investing public to make long term investments.
(v) They provide expert advice on matters relating to finance, thereby enabling companies to know where to invest and when to do so.
(vi) The SSM complements the functions of the stock exchange market.