What distinguishes a primary market from other types of markets?

A primary market is characterized by securities being sold directly to the public by the issuers of those securities. In this market, companies or governments can raise capital by issuing new stocks or bonds, with investors purchasing these securities directly from the issuer. This direct transaction is fundamental as it distinguishes the primary market from secondary markets, where previously issued securities are traded among investors without the involvement of the issuing entity.

Other options do not accurately describe the primary market: Trading among investors typically occurs in secondary markets, where the ownership of securities changes hands. The suggestion that securities in the primary market are exclusively for institutional investors is misleading, as these markets are accessible to a wide range of investors, including individual retail investors. The idea that price factors are regulated by the government may apply to various aspects of financial markets but doesn't specifically define the primary market's unique characteristics. Thus, the accurate definition focuses on the direct sale of securities from issuers to investors.