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 |
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Floor trader |
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Market maker |
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Commission broker |
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Dealer |
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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