Asked by Samantha Roderick on Sep 24, 2024
Verified
"Market making"
A) is the action of bringing together high value buyers and low value sellers
B) transfers goods from their low value uses to high value uses,creating wealth
C) can not occur if the transaction costs are too high to prevent value creating transactions
D) all of the above
Market Making
A financial service activity where a firm quotes both buy and sell prices for financial instruments, facilitating liquidity and trading activity in the market.
Transaction Costs
Expenses incurred when buying or selling goods or services, which may include fees, taxes, or other costs beyond the price of the product itself.
Wealth
The total value of all financial assets and tangible possessions owned by an individual or entity after deducting liabilities.
- Understand the role and functions of a market maker in financial markets.
- Understand the implications of transaction costs on market making and trading.
Verified Answer
VS
vikram singh5 days ago
Final Answer :
D
Explanation :
Market making involves bringing together buyers and sellers and transferring goods from low value to high value uses, which creates wealth. However, if transaction costs are too high, market making cannot occur and value-creating transactions will not happen. Therefore, all of the above options are correct.
Learning Objectives
- Understand the role and functions of a market maker in financial markets.
- Understand the implications of transaction costs on market making and trading.