Question

Which of the following statements is TRUE?A. The Gordon Growth Model assumes constant dividend growth but implies that stock prices grow at a different rate.B. A stock's price is the present value of its future cash flows, namely, its expected capital gains and dividends.C. Brokers buy and sell securities from their own inventory, while dealers bring buyers and sellers together to complete transactions.D. Holders of common stock have greater voting rights in corporate decisions than holders of preferred stock, but they have less voting rights than creditors of the corporation.

Answer 1

The correct answer is letter "C": Brokers buy and sell securities from their own inventory, while dealers bring buyers and sellers together to complete transactions.

Step-by-step explanation:

In a dealer market, participants buy and sell through dealers designated as market makers. These are electronic networks were market makers or brokers keep inventories from which they buy and sell stocks to customers or other dealers. They provide liquidity as well as transparency by displaying the price at which they will buy a security.