Question

In a dealer market, some dealers hold a certain inventory of specific securities and create a liquid market by purchasing and selling their inventories. These dealers make a market and are thus called market makers. Agents in the market bring investors to the dealers through a network of terminals and electronic systems. Where do dealer profits come from in a dealer market?

Interest charges
The bid-ask spread
Dividend payments

Answer 1

Answer:

the bid-ask spread

Explanation:

According to my research on different investment strategies, I can say that based on the information provided within the question the dealers profits come from the bid-ask spread. This is known as the difference between the prices quoted for an immediate sale and an immediate purchase of a particular asset such as stocks, securities, and futures contracts. Used by many people such as brokers and dealers in order to make profits by buying low and selling high.

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