Trading, Accounts & Prohibited ActsQuestion 190 of 398
Which statement best describes the over-the-counter (OTC) market?
a.It is a physical trading floor where an auction takes place
b.It handles only the initial sale of new securities
c.It is where listed securities are matched by a designated market maker on an exchange floor
d.It is a decentralized network of dealers who negotiate trades electronically or by phone
Explanation
The OTC market has no central physical location; it is a dealer-driven, negotiated market connected electronically and by telephone. Exchanges, by contrast, are centralized auction markets where buyers and sellers compete through posted bids and offers.
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