How are financial trades made in an over-the-counter market, Financial Management

Assignment Help:

How are financial trades made in an over-the-counter market? Discuss the role of a dealer in the OTC market.

In difference to the organized exchanges, which have physical locations, the over - the - counter market has no fixed location, or more correctly, it is everywhere. The over- the- counter market, or OTC, is a network of dealers around the world who maintain inventories of securities for sale. If you desire to buy a security that is traded OTC, you would contact your broker, who would then shop between competing dealers who have the security in their inventory. After locating the dealer with the greatest price, your broker would purchase the security on your behalf.

The role of dealers:  Dealers make their living reselling them to others and buying securities.  They work just like car dealers who buy cars from manufacturers for resale to others.  Dealers compose money by buying securities for one price called as the bid price and selling them for a higher price called as the ask price. The spread or difference between the ask price and the bid price represents the dealer's fee.

 


Related Discussions:- How are financial trades made in an over-the-counter market

Venture capital and private equity, It is argued that VC & PE houses achiev...

It is argued that VC & PE houses achieve superior returns through ruthlessly focussing management on short to medium term outcomes. In particular, parsimonious cash management is g

Explainthe principles of banking and finance, An introduction to the princi...

An introduction to the principles of banking and finance It covers a broad variety of topics using an economic perspective and aims to give a general background to any student

Municipal bonds, 1. Tax-backed debt and 2. Revenue bonds ...

1. Tax-backed debt and 2. Revenue bonds are two types of municipal bonds.

Cost of the share at end of current financial year, Example: - MM Foam Com...

Example: - MM Foam Company at present has 5000 outstanding shares selling at Rs. 100 each. The firm suppose to have a net earning of Rs. 50000 as well as contemplating a dividend

How does the net present value relate to value of the firm, How does the ne...

How does the net present value relate to the value of the firm? The net present value is the dollar amount of the amend to the value of the firm if the project under considerat

Assessing impact on management risk, Assessing Impact: As with the asse...

Assessing Impact: As with the assessment of likelihood, a valuable way of assessing impact would be the creation of categories of impact as follows: Level

Define the term- cost of capital, Define the term- Cost of capital Cost...

Define the term- Cost of capital Cost of capital is the rate of return a firm should earn on its investments for the market value of the firm to remain unchanged. Acceptance of

Show the compound value of the single flow, Q. Show the Compound Value of t...

Q. Show the Compound Value of the Single Flow ? Compound Value of the Single Flow (Lump Sum):- The process of computing future value becomes very cumbersome if they have to be

Find out the price of the swap from corporation's viewpoint, A company ente...

A company enters into a five-year interest rate swap along with a swap bank where it  agrees to pay the swap bank a fixed-rate of 9.75 percent yearly on a notional amount of DM15,0

Calculate the price of winnebago stock , Calculate the price of Winnebago s...

Calculate the price of Winnebago stock (Winnebago has no debt so this is the market value of the firm seperated by the number of common shares outstanding.) from the cashflows you

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd