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:

GDP

Gross Domestic Product, or GDP, represents the overall market value of all ultimate goods and services manufactured domestically in a specific timeframe.

Interest Rates

The cost of borrowing money or the return on investment for savings, usually expressed as a percentage of the total amount loaned or deposited.

Federal Budget Deficits

Occurs when a government's total expenditures exceed the revenue that it generates, excluding money from borrowings.

Inflow of Funds

The movement of money into an organization, sector, or economy for investment, consumption, or other purposes.