YOU ASK:
What is the definition of Primary Market?
WE ANSWER:
The Primary Market refers to the market where new issue securities are sold directly by the issuer.
When governments, companies or other groups need money for projects and to fund their operations, they can issue equity or debt based securities. Investment banks or underwriting groups helps facilitate the direct sale of these securities to investors. The beginning price range is set and the issuing company or government can receive the proceeds of the sales directly from the buying investors.
The primary market gives the investors the opportunity to get first crack at the security being issued. Then, when the initial sale is concluded, the trading goes on to the secondary market.
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