A liquidity provider is someone who:
A)helps make a market more liquid by being always ready to buy or sell an asset.
B)works at a bank and specializes in loans.
C)works in the financial system.
D)None of these is true.

Question

Quizplus · Accepted Answer

A liquidity provider is an individual or a company that helps make a market more liquid by being always ready to buy or sell an asset. They provide liquidity by ensuring that there is always a buyer or seller available for anyone who wants to trade. This helps minimize market volatility and improves market efficiency. Therefore, option A is the correct choice. Options B and C are both too broad and do not fully capture the definition of a liquidity provider. Option D is incorrect because one of the options is true.

A Liquidity Provider Is Someone Who