Shares of instructional software company Rosetta Stone Inc. (RST) soared more than 40% Thursday in their debut on the New York Stock Exchange, a sign that the long-dormant market for new stock issues might be awakening.

Rosetta Stone’s IPO was just the fourth deal this year from a newly minted public company. Its programs are used for teaching foreign languages.

The company priced its initial public offering at $18 a share Wednesday, the first IPO to price above its expected range in nearly a year.

Rosetta Stone sold 6.25 million shares for a dollar more than its expected range of $15 to $17, which was set by underwriters Morgan Stanley and William Blair & Co.

In mid-day trading, the shares, which opened at $23, had climbed as high as $25.50.

It’s the first IPO to price above its range since industrial pump and valve company Colfax Corp. (CFX) went public in May 2008.

Rosetta encountered stronger demand from investors than Bridgepoint Education Inc. (BPI), an online college that priced below its range Tuesday night and ended its first day of trading up 6%.

“Investors have been pretty finicky about jumping into a market that’s been damaged,” said Kathy Smith of Renaissance Capital, an IPO research firm in Greenwich, Ct. “This one hit the sweet spot.”

Smith said the IPO market “basically shut down” last summer.

Things have picked up in 2009, however, as indicated by Renaissance Capital’s FTSE Renaissance IPO Composite Index, which is up 8.8% year-to-date.

Smith said Rosetta made an attractive target for IPO investors because it’s a well-established company in a fast growing business that came public at a time when investors’ tolerance for risk is low.

According to Renaissance Capital’s research at www.ipohome.com, Arlington, Va.-based Rosetta made $14 million on revenue of $209 million in 2008.

Because the market has been so shakey, Rosetta’s shares probably priced a bit lower than they might have during a steadier market, which made its shares that much more appealing, said Smith.

“It looked to us like the original range was really attractive,” she said.

Investors agreed.