Question

The basic difference between brokers and dealers is that: A. There is no difference. B. brokers...

The basic difference between brokers and dealers is that:

A. There is no difference.

B. brokers can trade only on organized exchanges and dealers can trade only over-the-counter.

C. dealers own the securities they trade and brokers act as agent for buyer and seller.

D. brokers own the securities they trade and dealers act as agent for buyer and seller.
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Answer #1

Sol:

Answer is C. dealers own the securities they trade and brokers act as agent for buyer and seller.

The basic difference between a broker and a dealer is the capital requirement and their role in the market. A broker is a person who executes the trade on behalf of others, whereas a dealer is a person who trades business on their own behalf.

A broker is one who will buy and sell securities on behalf of his clients on the other hand a dealer is a person who will buy and sell securities on his own account.

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