General Securities Representative (Series 7) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the General Securities Representative Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

Who does not make a market in secondary issues and does not trade for the firm's own account?

Market maker
Broker's broker
Inter-dealer broker
Institutional trader

The correct answer is: Broker's broker

The correct answer is the broker's broker. A broker's broker is specifically designed to act as an intermediary for other brokers, facilitating trades without taking a principal position in the market. This means they do not make a market in securities nor do they trade for their own account, ensuring their role is primarily to assist other brokers in executing trades away from the public market. In contrast, market makers provide liquidity by continuously buying and selling securities and thus do engage in trading for their own account. Inter-dealer brokers also execute trades but can work with various dealers in the market, helping them find counterparties to transactions without taking on a direct market-making role. Institutional traders, meanwhile, work for large financial institutions and are often involved in trading securities for their own firm, including secondary issues. Therefore, the broker's broker stands out due to its distinctive role of purely facilitating transactions for other brokers without participating in the market as a trader.