Final answer:
The trading of previously issued stock occurs in the secondary market, where investors buy and sell the securities among themselves, providing liquidity and enabling price discovery for the traded assets.
Step-by-step explanation:
The trading of stock that was previously issued takes place in the secondary market. In this market, previously issued securities, including stocks and bonds, are bought and sold by and to investors, providing liquidity. The secondary market contrasts with the primary market, where securities are created by companies and sold to the public in transactions such as initial public offerings (IPOs). Once these investments have been made in the primary market, they are often traded in the secondary market. An example of a platform where such trades occur is the stock exchange, a location where financial securities are traded between investors.
The primary market enables companies to raise capital directly from investors, whilst the secondary market allows investors to buy and sell these securities among themselves. While the secondary market provides the chance for investors to sell their investments, offering essential liquidity, companies do not raise new capital in this market as they are not the direct sellers of the shares.