A person purchases stock XYZ (an Over The Counter stock) from a company who is also the market maker ...

By Investopedia Staff AAA
Q:
A person purchases stock XYZ (an Over The Counter stock) from a company who is also the market maker for XYZ. The price that the person would pay for the stock:

a) Does not include a markup
b) Includes the markup and commission
c) Includes the markup
d) Is discounted for the markup
e) None of these are true.

A:

The correct answer is c
When the firm is a market maker in the stock then it must act as a principle. Principal is the main party to a transaction, acting as either a buyer or seller for his/her own account and risk. Because the market maker must act as principal the person would only be charged a markup, not a commission.

Have a Financial Question?

RELATED FAQS

  1. What are the differences between the Series 6 exam and the Series 7 exam?

    Learn about the regulatory exams needed to become a limited or registered representative and the main differences between ...
  2. Do I have to successfully complete the Series 7 exam before I can register for the ...

    There are no prerequisites to register for the Series 63 exam. However, once you have registered for the exam, you must schedule ...
  3. I completed the Series 6, do I have to complete the entire Series 7?

    After having written the Series 6 examination, there would be significant overlap with the Series 7 in areas such as mutual ...
  4. I need special accommodations when taking the Series 63 exam. How are such arrangements ...

    Learn more about special accommodations offered by Series 63 testing sites, and discover how to request special accommodations ...
RELATED TERMS
  1. Series 79

    A examination to ensure a candidate is qualified to become a ...
  2. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  3. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  4. Financial Advisor

    One who provides financial advice or guidance to customers for ...
  5. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...
  6. Series 28

    An exam given by the Financial Industry Regulatory Authority ...

You May Also Like

Related Articles
  1. Professionals

    Should You Add A Securities License ...

Trading Center