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Question 4

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Essentials Of Investments
Found in: Page 79
Essentials Of Investments

Essentials Of Investments

Book edition 9th
Author(s) Zvi Bodie, Alex Kane, Alan Marcus, Alan J. Marcus
Pages 748 pages
ISBN 9780078034695

Short Answer

How do security dealers earn their profits?

Through frequent trading at bid and ask price and by trading on information not available to others.

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Step by Step Solution

Definition

A security dealer is an individual or a firm who regularly purchases securities at bid price and sells at ask price.

Explanation

One of the ways how a security dealer earns profit is through frequent trading at bid and ask price thereby pocketing spread as trading profit. Other than this, being the specialist of securities, they also profit by trading on information not available to others.

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