In finance, securities trade either on exchanges or in the over-the-counter (OTC) markets. Corporate debt, such as bonds, trades almost exclusively in the OTC markets, meaning most corporate bonds don’t trade on exchanges.
Exchanges are centralized marketplaces where investors trade securities, such as the New York Stock Exchange (NYSE). A small number of corporate bonds do trade on the NYSE. When a transaction happens there, it’s an exchange trade, not an OTC trade.
Some corporate bond investors try to buy at lower prices and sell later at higher prices (although many bond investors simply buy and hold to maturity). Market prices move largely because of changes in interest rates, but the bond’s market price is ultimately set by demand in the market.
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