CSI Investment Funds In Canada (IFC) Part 1 Practice Exam

Which market would you be in when a company issues new shares to raise capital for the first time?

Secondary Market Primary Market Open-end Fund Over-the-counter Market

Correct Answer:

Primary Market

Explanation:

Primary market. This is the market where a company issues new shares to raise capital, such as through an IPO. The company receives the proceeds from the sale, with underwriters helping set the price and allocate shares. Once issued, those shares move into the secondary market, where existing shares are traded among investors. The open-end fund is a mutual fund product, not a company issuing its own shares, and the over-the-counter market refers to trading that often occurs outside formal exchanges and is still generally secondary market activity. So issuing new shares to raise capital for the first time happens in the primary market.

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