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A market maker is the type of entity that:

A. Earns a fee for making recommendations to its clients
B. Is also referred to as a broker
C. Buys securities for and/or sells securities from its inventory position
D. Executes trades directly with FINRA



Answer :

Final answer:

A market maker buys and sells securities to provide liquidity in financial markets.


Explanation:

A market maker is an entity that buys securities for and/or sells securities from its inventory position. Market makers help provide liquidity in financial markets by standing ready to buy or sell securities.

For example, a market maker may quote buying at [tex]$99.00 and selling at $[/tex]99.125 for a certain bond, profiting from the spread. This continuous buying and selling by market makers help ensure there are always willing buyers and sellers in the market.

Market makers play a crucial role in maintaining smooth and efficient trading operations in exchanges like the New York Stock Exchange.


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