The investment dealer's function involves:
A) taking none of the risk in the distribution of an issue.
B) always insuring a company a given amount of equity can be sold so that long-range financial planning can be made accurately.
C) making a market by buying and selling a security to insure a liquid market.
D) guaranteeing a set price for the security.

Question

Quizplus · Accepted Answer

The function of an investment dealer includes making a market by buying and selling a security to ensure a liquid market. This involves taking on some risk, as the investment dealer must be willing to hold inventory of the security in order to buy and sell it on demand. Option A is incorrect because the investment dealer does take on some risk. Option B is incorrect because the investment dealer does not guarantee a set amount of equity to be sold. Option D is incorrect because the investment dealer does not guarantee a set price for the security but rather buys and sells it at prevailing market prices.

The Investment Dealer's Function Involves