Which of the following statements is true about secondary markets in the United States?
A) In terms of market capitalization (total stock value) of the firms listed, the NASDAQ is the largest in the world and the NYSE is the second largest.
B) NASDAQ is an OTC (over-the-counter) market.
C) Firms listed on the NASDAQ tend to be, on average, larger in size, and their shares trade more frequently than those traded on NYSE.
D) In the United States, most secondary market transactions are done over the counter.

Question

Quizplus · Accepted Answer

The NASDAQ is indeed an OTC market, where stocks are traded through a network of dealers rather than on a centralized exchange. However, statement A is false as the NYSE is actually the largest in terms of market capitalization. Statement C is also false as the opposite is true - firms listed on the NYSE tend to be larger, more established companies, while the NASDAQ tends to have smaller, high-growth potential firms. Statement D is partially true - while many secondary market transactions are done over the counter, there is still a significant amount of trading that takes place on centralized exchanges like the NYSE and NASDAQ.

Which of the Following Statements Is True About Secondary Markets