Question

You have agreed to pay a 5 percent commission to your best friend if he can...

You have agreed to pay a 5 percent commission to your best friend if he can locate a buyer for your car. This arrangement is most similar to the compensation arrangement for which one of these individuals who is involved with the stock market?

DMM

Floor trader

Market maker

Commission broker

Dealer
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Answer #1

The correct answer is Commision Broker. They charge a percentage of charges for either buying or selling a security on the behalf of a retail or institutional investor.

A market maker is an entity which buys and sells securities for its own account or even for other investors. This action keeps the market liquid. It gains from the bid-ask spread on buying and selling.

DMM or designated market maker is similar to market maker just that they deal in securities of a particular company.

Floor trader trader for their own account.

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