What is referred to as the primary market?

The primary market is defined as the market where new securities are created and sold to investors directly by the issuers. In this context, when an investor purchases securities from the issuer, such as stocks or bonds during their initial offering, this transaction takes place in the primary market. Companies, municipalities, or governments issue new stocks and bonds to raise capital, and the funds raised from these sales go directly to the issuer. This is different from the secondary market, where previously issued securities are bought and sold among investors.

The other options describe different aspects of financial markets but do not accurately define the primary market. The first option highlights existing securities, which are dealt with in the secondary market. The second option discusses a broader scope of stock trading that encompasses both new and existing shares. The fourth option specifies corporate bonds but does not capture the primary market's focus on initial issuance across various securities. Thus, the correct characterization of the primary market is specifically tied to the direct purchase of newly issued securities from the issuer.