Definition of Primary Market

Financial Terms Beginning with P

What is a Primary Market

The primary market is the market in which a new security is priced, issued and distributed. While it is often part of an exchange, the primary market is the mechanism used by companies, governments and other groups to obtain financing through debt-based or equity-based securities.

In the primary market, investors can purchase securities directly from the issuer of the security. Types of primary market issues include an initial public offering (IPO), a private placement, a rights issue and a preferential allotment.

After the security is issued in the primary market, further trading will occur on the secondary market.

Glossary of Terms and Phrases

A financial dictionary or glossary is an essential tool to better understand the meaning of a specialized term or phrase. It would obviously make life much easier if everyone spoke the same language and used the same financial terms and phrases but that is not realistic.

We learn new languages to communicate with each other, transact business globally and to appreciate other cultures. Global finance is a specialized language that if understood and mastered, it will provide benefits that help to decrease risk and improve investment returns. Financial literacy is the foundation of developing good investment strategies and sound decision making.

Related Investment Terms

Equity Risk

Investment Banking

Underwriter

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