Rule 5 of 8 in this unit1.1.4

1.1.4 Market Participants and their Roles

SIE outline 1.1.4

Issuer Raises It, Underwriter Places It

The issuer sells new securities. The underwriter buys them first and resells to the public. NOT the same participant.

The method for this kind of question
  1. Place the name on the map first

Now answer

1 question on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Exam level

A single firm is exclusively assigned to one listed stock on an exchange and carries an affirmative obligation to maintain a fair and orderly market in it. What is this participant called today?

How sure are you?

Correct: B. A designated market maker, formerly called a specialist, is the single firm assigned to a listed security with that affirmative obligation.
A. A market maker is one of possibly several competing quoters in an over-the-counter security, not a single exclusive assignment.
C. An introducing firm takes customer orders; it has no role making prices in a listed security.
D. A prime broker finances and reports an institution's trades elsewhere; it does not make markets.

Unit: SIE outline 1.1.4

Next ruleThe Market Maker's Job

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