While stocks and bonds are issued first in the primary market, firms actually receive most of their financing through the sale of securities in the secondary market.

Question

Quizplus · Accepted Answer

Firms may sell securities in the secondary market, but most of their financing comes from the primary market where stocks and bonds are initially issued. This is because the funds raised through primary market offerings go directly to the firm, while in the secondary market, the buying and selling of securities occurs between investors and does not provide new funds to the issuing company.

While Stocks and Bonds Are Issued First in the Primary