ECONOMICS
FINANCIAL MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Only works on quote-driven markets
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Has a complete overview of the demand and the supply of a stock
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Makes the Market
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Provides bid and ask prices for a certain stock
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Detailed explanation-1: -The term market maker refers to a firm or individual who actively quotes two-sided markets in a particular security by providing bids and offers (known as asks) along with the market size of each. Market makers provide liquidity and depth to markets and profit from the difference in the bid-ask spread.
Detailed explanation-2: -Bid and ask prices are set by the market. In particular, they are set by the actual buying and selling decisions of the people and institutions who invest in that security. If demand outstrips supply, then the bid and ask prices will gradually shift upwards.
Detailed explanation-3: -The Securities and Exchange Commission (SEC) defines a market maker as “a firm that stands ready to buy or sell a stock at public quoted prices”2.
Detailed explanation-4: -A market maker, sometimes called a designated broker (DB), is a broker/dealer or investment firm that plays an essential role in how an ETF trades and ensures the continued and efficient exchange of securities between buyers and sellers.