What is the primary market?

The primary market is defined as the space where new securities are created and sold for the first time. In this market, companies, governments, or other entities issue new stocks and bonds to raise capital. Investors purchase these securities directly from the issuer, which allows the issuer to receive funds that can be used for various purposes such as growth, operational costs, or capital projects.

This explanation identifies the role of the primary market in the financial system, distinguishing it from the secondary market where existing securities are traded among investors. The first issuance of bonds is a fundamental activity in the primary market, solidifying the correct selection in this context. Other types of markets mentioned in the options focus on different asset classes or pre-existing securities, which do not pertain to the definition of the primary market.