10 Questions
What is the primary role of a DMM in the NYSE?
To act as a dealer and provide liquidity
What is the goal of short selling as an investment strategy?
To profit from an anticipated decrease in the stock's price
What is the first step in the short selling process?
Borrowing shares of a stock
What is the purpose of short sale restrictions?
To limit the ability of investors to short sell stocks
During what times does the NYSE function as an auction market?
During the opening and closing of trading, and during trading halts
What is the outcome of a successful short selling strategy?
A profit equal to the difference between the selling price and the repurchase price
What is the primary concern of regulators regarding short selling?
All of the above
What is the role of DMMs in managing the auction process?
To determine the single price that maximizes the number of shares traded
What happens to the borrowed shares at the end of a short selling process?
They are returned to the brokerage or the original owner
What is the effect of short selling on the market according to regulators?
It can exacerbate downward price movements and increase market volatility
Test your understanding of over-the-counter securities trading, including the role of broker-dealers, OTC Link ATS, and the risks associated with lower liquidity. Learn how to negotiate trades and execute orders in this market.
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