Let's dive deeper into public markets! Let's start with where securities are actually born - the primary market.

Think of primary markets as the birthplace where brand new stocks and bonds first come into existence and are sold to investors.

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Where do new stocks and bonds first come into existence before they can be traded elsewhere?

Companies need money to grow their business - maybe to build new factories, hire more employees, or develop new products.

Instead of just borrowing from banks, they can sell pieces of ownership (stocks) or promise to pay back loans (bonds) to the public.

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Why might a company prefer this over bank loans?

The most famous way companies enter primary markets is through an Initial Public Offering, or IPO.

An IPO is when a private company sells its stock to the public for the very first time, becoming a "public company."

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Can you think of any companies that went public recently?

Here's how an IPO works: The company decides how many shares to create and sets an initial price. Investors can buy these brand new shares directly from the company.

The money goes straight to the company, not to other investors.

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Why is it important that money goes to the company?

Several key players make primary markets work: the company issuing securities, investment banks that help with the process, and institutional investors who often buy large amounts.

Individual investors like you can also participate in some IPOs.

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What is one potential risk of buying IPO shares?

Primary markets are crucial because they're how companies raise the capital they need to innovate and grow.