Cecil is a dealer who trades small stocks and illiquid bank stocks using his computer. He trades with other dealers all over the country without having to go to a physical location. Which type of market does this scenario best describe?

Question

Quizplus · Accepted Answer

This scenario describes the over-the-counter (OTC) market. Unlike the organized exchanges that have a central location, the over-the-counter market is a network of dealers all over the country linked by computers, telephones, and Teletype machines. It also trades most corporate bonds and U.S. government securities. Today, the over-the-counter market consists of small stocks, illiquid bank stocks, penny stocks, and companies whose stocks trade on the "pink sheets."

Cecil Is a Dealer Who Trades Small Stocks and Illiquid