Which statement best describes the primary market?

The primary market refers specifically to the financial market where new securities are issued and sold for the first time. This is where companies and governments raise funds by selling stocks or bonds directly to investors. This issuance helps organizations finance their operations, pay debts, or invest in new projects. In the primary market, investors purchase securities directly from the issuer, which means that the proceeds from the sale go directly to the entity raising capital.

Understanding this concept is fundamental to grasping how capital markets function, as it distinguishes between the creation of securities and their subsequent trading, which occurs in the secondary market. The other descriptions focus on different aspects or markets, such as the trading of existing securities, real estate transactions, or commodities trading, and do not accurately capture the primary market's role in the financial system.