alleryStart learning →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_
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