Primary market

Definition

The primary market is a segment of the securities market where new issues of securities, such as stocks and bonds, are sold directly by issuers to investors for the first time. It enables corporations, governments, and other entities to raise new capital.

Related terms

Initial Public Offering (IPO):

An IPO is when a company offers its shares to the public in the primary market for the first time.

Underwriting: This process involves financial institutions serving as intermediaries that assess risk and set a fair value on newly issued securities in the primary market.

Secondary Market: A market where investors buy and sell securities they already own among themselves, which contrasts with the primary market where securities are first issued