Final answer:
A software company issuing shares to the public for the first time is participating in the primary capital market through an initial public offering (IPO).
Step-by-step explanation:
When a software company issues shares of stock to the public for the first time to raise funds for a planned product expansion, it is participating in the primary capital market.
This initial public offering (IPO) provides the company with financial capital for expansion and allows it to repay early-stage investors such as angel investors and venture capital firms.
This stock issuance enables the company to raise funds without having to repay lenders and gives investors the opportunity to participate in the company's future profits through dividend payments or stock price appreciation, depending on the company’s success.