Which of the Following Is Not True with Respect to Market

question 79

Multiple Choice

Which of the following is not true with respect to market makers?

• A)They benefit from the spread.
• B)They may earn profits when they take positions in options.
• C)They are not subject to the risk of loss on their positions in options.
• D)All of the above are true with respect to market makers.

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Definitions:

Price Floor

A government- or authority-set minimum price for certain goods or services, aimed at preventing prices from falling below a certain level.

Black Markets

Illegal trading of goods and services that occurs outside the official channels sanctioned by authorities.

Price Ceilings

An imposed limit on the price charged for a product or service, often set by government regulation to protect consumers from excessively high prices.

Market Intervention

Market intervention is the action taken by a government or a regulatory authority to affect the market for a particular good or service, typically to correct market failures.