Primary Market
What is the essential difference between a primary and secondary distribution?
Primary = issuer sells new shares, receives proceeds. Secondary = existing holders sell, issuer gets nothing.
Complete Analysis & Legal Rationale
In a primary distribution, the issuing company sells new shares and receives the proceeds for corporate purposes. In a secondary distribution, existing shareholders sell their already-issued shares, and the issuer receives nothing. Both can involve equity or debt, and pricing varies based on the type of offering.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Matches the verified teaching point in the explanation.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA materials.