Question

Demonstrate the potential benefits and problems for a corporation and a potential investor in trading the...

Demonstrate the potential benefits and problems for a corporation and a potential
investor in trading the securities in the over-the-counter (OTC) market?

Requirements

(350 words Min/ 450Max)

0% plagiarism rule

Business   Finance   
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Homework Answers

Answer #1

Benefits in trading securities in the Over-The-Counter (OTC) market:

1. More privacy.

2. Potential entry of other entities not possible.

3. Deal with a trusted corporation.

4. Better for bigger trades and large traders.

5. Reputation of corporation on the line.

6. More secure transactions.

Problems in trading securities in the Over-The-Counter (OTC) market:

1. Counterparty risk.

2. Higher fees.

3. Not suitable for small trades and small traders.

4. Have to find a trustable corporation.

5. Cannot be automated.

6. Settlement risk.

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