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Soru

Zorluk: KolayMarket Participants and Investor Classifications

An investor places an order with a securities firm to purchase 100 shares of stock. The firm matches the customer's buy order with another investor's sell order in the secondary market and charges a fee for facilitating the transaction. In what capacity did the broker-dealer act, and how was it compensated?

  1. Acting as an agent and receiving a commissionCevap
  2. B
    Acting as a principal and charging a mark-up
  3. C
    Acting as a dealer and earning a mark-down
  4. D
    Acting as an underwriter and earning a underwriting spread

Cevap

The broker-dealer acted as an agent (broker) and was compensated by receiving a commission.
When a broker-dealer acts as an agent (broker), it operates as a broker finding a counterparty to execute a trade on behalf of the client. In this capacity, the firm does not trade from its own inventory and is compensated by charging a commission.

Adım Adım Çözüm

1
Analyze the firm's role in executing the trade
The firm acted as a middleman matching a buying customer with a selling investor without taking ownership of the security.
Connecting buyers and sellers without executing out of proprietary inventory defines agency capacity.
2
Identify the proper compensation structure for an agency transaction
Agency transactions require charging a commission to the client.
Commissions are earned by brokers acting as agents, while mark-ups and mark-downs are earned by dealers acting as principals.

Anahtar Kavram

Broker (Agent) vs. Dealer (Principal) Capacity
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Konular

Market Participants and Investor Classifications

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