Frummarkaður

Frummarkaður refers to the primary market where securities are issued for the first time. This is where companies or governments raise capital by selling new stocks or bonds to investors. It is the market where the issuer directly receives the funds from the sale. This contrasts with the secondary market, where investors trade existing securities among themselves.

The process of issuing securities in the frummarkaður is often facilitated by investment banks, who underwrite the offering, meaning they purchase the securities from the issuer and then resell them to the public. This is known as an initial public offering (IPO) for stocks or a primary offering for bonds. The frummarkaður plays a crucial role in the economy by providing businesses with the necessary funds for expansion, research and development, or to finance large projects.

Key activities in the frummarkaður include setting the issue price, marketing the securities to potential investors, and distributing them. The success of an issuance in the frummarkaður can be an indicator of investor confidence in the issuer and the overall market sentiment. Once securities are issued and traded in the frummarkaður, they can then be bought and sold on secondary markets, such as stock exchanges, which provides liquidity for investors.