Final answer:
Stock prices in the over-the-counter market are determined by competitive bid and negotiation.
Step-by-step explanation:
In the over-the-counter (OTC) market, stock prices are determined by competitive bid and negotiation. OTC markets are decentralized, meaning that there is no centralized exchange like the New York Stock Exchange. Instead, buyers and sellers interact directly with each other, negotiating and bidding on stock prices.
For example, in the OTC market, a buyer may make an offer to purchase a stock at a certain price, and the seller can negotiate and counteroffer until both parties agree on a price. This negotiation process allows both buyers and sellers to have a say in determining the final stock price.
The OTC market operates based on the principles of supply and demand, where the prices are influenced by the competing bids and negotiations made by buyers and sellers.