Which market is for new financial instruments being sold?

• A. Secondary Market
• B. Primary Market
• C. FOREX Market
• D. Commodity Market

Answer: (B)

When new financial instruments are issued for the first time, they are sold in the primary market. This is the channel through which a company or government raises fresh capital by selling new shares or new bonds to investors, with the proceeds going to the issuer. Underwriters, price setting, and initial distribution activities occur here, and examples include initial public offerings and new bond issues. After the securities are issued, they may move into the secondary market, where investors trade existing securities among themselves, which is separate from the original sale. The FOREX market deals with exchanging currencies, not issuing new securities, and the commodity market focuses on trading physical commodities or their derivatives. So, for the sale of new instruments, the primary market is the correct concept.