Which statement best describes primary markets vs secondary markets and their role in price discovery?

• A. Primary markets are where new securities are issued for the first time; secondary markets trade existing securities. Both contribute to price discovery: primary sets initial pricing via underwriters, while secondary provides liquidity and ongoing price signals.
• B. Primary markets trade existing securities; secondary markets issue new securities.
• C. Primary markets involve foreign exchange only; secondary markets involve commodities.
• D. Primary markets are exempt from price discovery.

Answer: (A)