Which of the Following Statements Is True About Secondary Markets

question 19

Multiple Choice

Which of the following statements is true about secondary markets?

• A) A buyer may incur search costs and find a seller on their own through a direct search.
• B) A broker may bring buyers and sellers together, charging a commission.
• C) A dealer may sell and buy securities using his inventory, therefore reducing search costs. The dealer's return is the bid/ask spread.
• D) An auction market allocates the selling shares to the highest bidder.
• E) All of the above statements are true.

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Definitions:

Trade

The exchange of goods, services, or both between two or more parties.

Producer Surplus

The difference between the amount a producer is paid for a good or service and the minimum amount they are willing to accept for producing it.

Trade

The action of buying, selling, or exchanging goods and services between people, firms, or countries.

Government Revenue

The income received by the government from various sources, including taxes, fees, fines, and the sale of goods and services.