- CFA Exams
- CFA Level I Exam
- Topic 5. Equity Investments
- Learning Module 1. Market Organization and Structure
- Subject 3. Financial Intermediaries
CFA Practice Question
All of the following are characteristics of the OTC market except:
II. trading can take place through electronic devices.
III. there is no central location.
IV. there is only one dealer in each security.
I. trading can take place through telephones.
II. trading can take place through electronic devices.
III. there is no central location.
IV. there is only one dealer in each security.
Correct Answer: IV only
Statements I, II, and III are all true. There may be as many as 25 to 30 dealers (market makers) in some of the larger companies like MCI. Dealers are similar to specialists and compete for market share.
User Contributed Comments 5
| User | Comment |
|---|---|
| dobrekone | III ? |
| magicchip | III is true. |
| Renaud1807 | There is no central location as it is an OTC market, dealers make a market "in their offices", behind computers or through negociation on the phone. The NASDAQ system makes the dealers quotes available but there is no central location. |
| johntan1979 | That's right... it could be anywhere, even from the top of Mount Everest. |
| enetis | MCI .... RIP |