Home › US CMA Part 2 › Financial Management › Financial Management and Securities Markets › How do buyers and sellers transact in a dealer m…
How do buyers and sellers transact in a dealer market?
ADirectly with each other on a trading floor
BThrough a single clearing house in New York
CThrough securities dealers called market makers
DThrough the issuing company's own treasury desk
Answer & Solution
Correct answer: C. Through securities dealers called market makers
1. Dealer markets do not operate on centralized trading floors, using sophisticated telecommunications networks instead.
2. Buyers and sellers do not trade securities directly with each other as they do in broker markets.
3. They work through securities dealers called market makers, who make markets in one or more securities and offer to buy or sell at stated prices.
4. A transaction has two parts: the selling investor sells to one dealer and the buyer purchases from another, or in some cases from the same dealer.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 16 "Understanding Financial Management and Securities Markets", section 16.7 Buying and Selling at Securities Exchanges_
Related questions
Since the Sarbanes-Oxley Act, what do CFOs consider their top priority?How did the NYSE answer the NASDAQ's head start in electronic trading?Under the rules approved in 2012, which falls in the S&P 500 Index trigger the three levelWhat does Regulation FD require of public companies?The Securities Investor Protection Corporation insures each customer's account up to what What is insider trading?What did the 1964 amendment to the Securities Exchange Act of 1934 add to the SEC's powersWhat does the Securities Act of 1933 require of a new securities issue?