SIE practice questionmediumMarket Participants — Market Maker
A market maker is best described as a dealer that:
- AOnly executes trades on behalf of institutional investors
- BStands ready to buy and sell a specific security at publicly quoted prices✓ Correct answer
- CMatches buyers and sellers without taking a position in the security
- DProvides investment advice to retail customers
Explanation
Why B — Stands ready to buy and sell a specific security at publicly quoted prices
A market maker is a dealer that stands ready to buy and sell a particular security at publicly quoted bid and ask prices, providing liquidity to the market. Market makers take positions in the securities they trade and profit from the bid-ask spread. Choice A describes a broker (agent), not a dealer. Market makers serve all market participants, not just institutional investors.
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