A securities dealer, or trader, earns a profit by

Question

Quizplus · Accepted Answer

A securities dealer or trader earns a profit by buying securities at a lower price and selling them at a higher price. The bid price is the highest price a buyer is willing to pay for a security, while the offer price is the lowest price a seller is willing to accept. Therefore, the dealer buys at the bid price and sells at the offer price, thus earning a profit on the difference between the two prices. Commission, mentioned in option A, is an additional fee charged by the dealer for executing the trade and is not the primary source of profit. Option B is incorrect as it suggests that the dealer sells at a lower price than what they paid, leading to a loss.

A Securities Dealer, or Trader, Earns a Profit by