Question of the Week
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.
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.