Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Should the bid be lower than the ask for a market maker or a price taker? Explain
Expert Solution
Step 1
Market makers are a class of market participants who are willing to buy and sell securities at prices published in their exchange. Market makers can be individuals or brokerage firms.
Price takers, on the other hand, are individuals who have to accept the rates set by the market makers in order to purchase or sell securities.
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