The correct answer is Secondary market. Capital MarketCapital Market is an institutional arrangement for borrowing medium and long-term funds and which provides facilities for marketing and trading of securities. So it constitutes all long-term borrowings from banks and financial institutions, borrowings from foreign markets, and raising of capital by issue various securities such as shares, debentures, bonds, etc. The securities market has two different segments namely-Primary marketsSecondary marketsThe primary market consists of arrangements for procurement of long-term funds by companies by the fresh issue of shares and debentures. The secondary market or stock exchange provides a ready market for existing long-term securities. The stock exchange is the secondary market, which provides a place for regular sale and purchase of different types of securities like shares, debentures, bonds & government securities. It is an organized market where all transactions are regulated by the rules and laws of the concerned stock exchanges. Hence, Option 2 is correct. Additional InformationSecondary Markets or Stock Exchanges :The functions of stock exchanges are to provide a ready and continuous market for securities, information about prices and sales, safety to dealings and investment, helps mobilization of savings and capital formation. It acts as a barometer of economic and business conditions and helps in better allocation of funds. Stock exchanges provide many benefits to companies, investors, and society as a whole. But they also suffer from limitations like exclusive speculation and fluctuation in prices due to rumours and unpredictable events. There are 21 stock exchanges in India presently, including BSE, NSE, and OTCEI. Stock Exchanges are regulated by the Securities Contracts (Regulation) Act and by SEBI. SEBI has initiated several reforms in the primary and secondary markets to regulate the stock market.