What is an example of a primary market?

The primary market is where new securities are created and sold for the first time. It provides a platform for issuers to raise capital by selling new stocks or bonds directly to investors. An example of this is the initial public offering (IPO) process, where a company sells shares of its stock to the public for the first time.

The over-the-counter market refers to a decentralized market where trading of financial instruments occurs directly between two parties without a centralized exchange or broker. This type of trading can include the issuance of new securities, thereby allowing participants access to the primary market.

In contrast, securities exchanges, such as the New York Stock Exchange, primarily facilitate the trading of existing (secondary market) securities rather than new issues, thus they do not cleanly fit the definition of a primary market. The real estate market and the foreign exchange market also do not involve the issuance of new securities; instead, they deal with real assets and currency trading, respectively, which again are characteristics of secondary market activities.

Therefore, the over-the-counter market serves as a platform where the primary issuance of securities may take place, thereby being a more appropriate representation of a primary market.