CFA Practice Question

CFA Practice Question

Which of the following statements is untrue of over-the-counter (OTC) markets?

I. Stringent laws regulate OTC trading.
II. The OTC market is very diverse because there are no minimum requirements, quality or otherwise.
III. In the United States, the OTC market is the largest segment of the U.S. secondary market in terms of number of securities traded.
IV. Any stock can be traded OTC as long as someone is willing to make a market in the security.
A. I and II.
B. III and IV.
C. I only.
Explanation: The OTC market is unregulated.

User Contributed Comments 8

User Comment
kuan I thought OTC is 3rd market... so III is untrue also?
danlan I think it is 2nd market
steved333 NASDAQ is part of OTC market, and the largest exchange in US
krisc NYSE has the largest volume but OTC has the largest no of listed shares.
djread The bond market is OTC...that makes III obvious
cjpatel are there no minimum requirements to list on the nasdaq.. i dont agree
mron any stock can be traded on OTC, as long as there are dealers for it. There's no restrictions. Notice it's not LISTED but TRADED.
JCopeland for kuan: The 3rd market is when exchange listed securities trade OTC. Otherwise, it along with registered exchanges comprise the 2nd market.
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