SECTION 1.2
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Questions and Answers

  1. Which of the following statements regarding the third market is true?

  • It is composed of listed securities traded OTC. (correct)
  • . It is composed only of unlisted securities.
  • The services of a brokerage firm are not used.
  • It refers to the block trading of unlisted securities.
  • 2 A large-volume transaction for an institutional investor has occurred on an alternative trading system or network. Entered anonymously, the general public will see no information regarding the volume, price, or who the institutional investor was. This transaction scenario is generally referred to as having occurred

  • on a U.S. exchange
  • in a dark pool (correct)
  • in the over-the-counter market
  • in the third market
    1. The SEC regulates the trading of all of the following except

  • the New York Stock Exchange
  • the Chicago Board of Options Exchange
  • the London Stock Exchange (correct)
  • the over-the-counter market
    1. When a broker-dealer maintains an inventory in a particular stock and trades that stock in the OTC market, it is acting as

    <p>a market maker</p> Signup and view all the answers

    1. All of the following are true for designated market makers except

    <p>they guarantee the customer will get a profitable trade</p> Signup and view all the answers

    Study Notes

    Third Market

    • A large-volume transaction for an institutional investor on an alternative trading system or network is referred to as the third market.
    • In the third market, transactions are entered anonymously, and the general public has no access to information regarding the volume, price, or the institutional investor's identity.

    Securities and Exchange Commission (SEC) Regulation

    • The SEC regulates the trading of all securities except for one type.
    • The type of security not regulated by the SEC is not specified.

    Broker-Dealers and OTC Market

    • When a broker-dealer maintains an inventory in a particular stock, it is acting as a principal.
    • Acting as a principal means the broker-dealer trades that stock in the OTC market.

    Designated Market Makers

    • All designated market makers have certain characteristics, except for one.
    • The exception is not specified.

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    Description

    Test your knowledge on the third market by identifying the true statements from the options provided. Explore the characteristics and functions of the third market in this quiz.

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