What is the initial sale of securities to investors called?

The initial sale of securities to investors is referred to as the primary market. In this market, companies issue new shares of stock or other financial instruments directly to investors in order to raise capital. This process is essential for companies looking to fund growth or expand operations. In the primary market, the proceeds from the sale go directly to the issuer, such as a corporation or government.

The primary market is distinct from secondary markets, where previously issued securities are bought and sold among investors without any direct involvement from the issuing companies. The distinction is important in understanding how finance and investment structures operate, as the primary market focuses on new issuance, while secondary markets deal with the trading of existing securities. Understanding this concept is crucial for grasping how capital markets function.