Series 7 Exam Question 197: Answer and Explanation

Question: 197

A DMM acts as a

• A. broker and dealer
• B. broker only
• C. dealer only
• D. neither a broker nor dealer

Correct Answer: A

Explanation:

A. DMMs (Designated Market Makers) create a trading platform for particular securities on an exchange. DMMs not only trade out of their own inventory as dealers but also execute trades for others as a broker.