What is the primary function of the primary market?

The primary market is fundamentally where new securities are issued and sold to investors for the first time. This is typically how companies raise capital by offering their shares or debt instruments directly to the investing public or institutional investors. In this context, the primary market allows businesses to obtain the necessary funding to support growth initiatives, pay down existing debt, or invest in new projects. Investors in this stage are acquiring ownership stakes or debt obligations directly from the issuer, which is why the understanding of the primary market is pivotal in finance.

The other options relate to different functions that do not align with the defining activities of the primary market. The trading of stocks after their initial offering occurs in the secondary market, and the listing of securities is also associated with that marketplace. Meanwhile, the repayment of bonds involves existing debt instruments, typically managed independently of the primary issuance process.