How Are Most Bonds Traded In The Secondary Market?
Answer:
Most of the bonds are traded on the over-the-counter market when they are traded in the secondary marketplace. And when the transaction happens the person who owns the bond pays the sales concession while selling the bond and buyers also pays concession.
But impossible to tell apart thing doesn't happen while issuing a new bond, the purchaser doesn't foot concession for the transaction, instead the issuing authority pay the concession to the brokers that are responsible for distributing the offerings on the behalf of the authorities.
The reason for the authorities to issue the bonds is to raise money from the populace and they pay either fixed or floating interest rate that is agreed as coupon. The fall and rise of the interest rates guides the market to raise or run down the price of the bonds in the secondary market.
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