Trading, Accounts & Prohibited ActsQuestion 200 of 398
When a retail customer places a market order to buy stock from a dealer, at which price will the customer generally buy?
a.At the bid price
b.At the ask (offer) price
c.At the midpoint of the spread
d.At the previous day's closing price
Explanation
A customer buys at the dealer's ask (offer) and sells at the dealer's bid. The dealer, conversely, buys at the bid and sells at the ask, earning the spread as compensation for providing liquidity.
Practice all 398 questions free — no signup required.
Related questions on this topic
- In the sequence of dividend dates, which date is when the board of directors formally announces that a dividend will be paid?
- Which of the following best distinguishes a securities exchange from the OTC market?
- Under T+1 regular-way settlement, how does the ex-dividend date relate to the record date?
- What happens to a standard stop order once the market reaches the stop price?
- An investment bank purchases an entire new issue of stock from a corporation and resells it to the public. In this primary-market role, the investment bank is acting as a:
- An investor who is 'long' 200 shares of a stock has which market position and outlook?
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against FINRA Securities Industry Essentials (SIE) Exam · How we review