One Benefit of Centralized Exchanges Compared to Over-The-Counter (OTC) Markets

question 94

Multiple Choice

One benefit of centralized exchanges compared to over-the-counter (OTC) markets is that:

• A)OTC markets require specialists, whereas centralized exchanges do not
• B)Mistakes in placing orders are more likely in OTC markets
• C)Centralized exchanges do not require physical access, whereas OTC markets do
• D)Centralized exchanges make use of electronic communications networks (ECNs), whereas OTC markets do not

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Definitions:

Collusive Oligopoly

A market situation where a few firms dominate and agree, formally or informally, on prices or production levels to minimize competition.

Limit Pricing

A strategy used by monopolies or market leaders to set prices low enough to deter new entrants into the market.

New Rivals

refers to competitors that enter a market and challenge existing firms with their products, services, or business models.

Cartel

An association of manufacturers or suppliers with the purpose of maintaining high prices and restricting competition.