SIE practice questionmediumMarket Participants - Market Makers
What function does a market maker perform on a securities exchange?
- ASets monetary policy for the exchange
- BProvides liquidity by buying and selling securities from its own inventory✓ Correct answer
- CProtects investors from losses
- DActs solely as an agent between buyers and sellers
Explanation
Why B — Provides liquidity by buying and selling securities from its own inventory
Market makers buy/sell securities for their own accounts, maintaining liquidity. Central banks set monetary policy. Investor protections are provided by SIPC, while agents only execute trades on behalf of clients.
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