Primary Market

The primary market is the financial market where new securities, such as stocks and bonds, are issued and sold to investors directly by the issuing company or government entity. It is the initial stage of securities trading, where companies raise capital by issuing new shares through Initial Public Offerings (IPOs) or bonds. The primary market helps companies and governments access funding for expansion or projects, providing an essential mechanism for capital formation.

Example

A tech startup raises capital by issuing new shares through an IPO in the primary market, offering stock directly to institutional investors and the public for the first time.