Correct Option: C. meant for the shares of quoted private companies Explanation of the Correct Answer: The second tier security market, often referred to as the "Second Tier Market" or "Alternative Securities Market," is specifically designed to facilitate the trading of shares from smaller or less established companies, which are typically private. This market allows these companies to raise capital by issuing shares to the public while still being less stringent than the main stock exchange.

1. Purpose of the Second Tier Market:
2. The primary purpose of the second tier market is to provide a platform for smaller companies to access capital. These companies may not meet the rigorous requirements of the main stock exchange but still wish to offer shares to the public.
3. It serves as a stepping stone for companies aiming to grow and eventually list on the main exchange.
4. Characteristics of the Second Tier Market:
5. Less Regulation: Compared to the main stock exchange, the second tier market has fewer regulatory requirements, making it easier for private companies to enter the market.
6. Target Audience: It attracts investors who are willing to take on more risk for potentially higher returns, as these companies may have higher growth potential but also higher volatility.
7. Examples of Companies:
8. Companies listed on the second tier market are often in their growth phase and may be involved in various sectors such as technology, manufacturing, or services. They are typically not as well-known as larger corporations but have the potential for significant growth.

Why the Other Options are Incorrect:

• Option A: an appendage to the Nigeria stock exchange
• This option suggests that the second tier market is merely an extension or a minor part of the Nigeria stock exchange. While it is related, it is not just an appendage; it serves a distinct purpose and operates with its own set of rules and regulations tailored for smaller companies.
• Option B: a member of the Nigeria stock exchange
• This option implies that the second tier market is a member of the Nigeria stock exchange, which is misleading. The second tier market operates under the umbrella of the stock exchange but is not a member in the traditional sense. It is a separate market segment designed for different types of companies.
• Option D: a regulating arm of the Nigerian stock exchange
• This option incorrectly identifies the second tier market as a regulatory body. The second tier market is not responsible for regulation; rather, it is a market for trading shares. Regulation is typically handled by the Securities and Exchange Commission (SEC) and the stock exchange itself, not by the second tier market.

Summary of Key Points:

• The second tier security market is designed for shares of smaller, quoted private companies.
• It provides a platform for these companies to raise capital with less stringent regulations.
• It attracts investors looking for higher-risk, higher-reward opportunities.
• It operates separately from the main stock exchange, serving a distinct purpose in the financial ecosystem.

This understanding of the second tier security market is crucial for students preparing for professional exams in commerce, as it highlights the structure and function of financial markets.