Final answer:
The OTC market is a decentralized trading platform for securities, such as government savings bonds or small CDs, often involving smaller companies. The NASDAQ represents an example of an electronic OTC market, unlike the NYSE and AMEX, which operate with physical trading floors.
Step-by-step explanation:
Securities that would be most likely to be traded on an over-the-counter (OTC) market are those not listed on major stock exchanges. The OTC market facilitates the trading of stocks, bonds, and other securities directly between parties without a centralized exchange, often involving smaller companies that don't meet the requirements for being listed on formal exchanges. One example of an OTC market is the National Association of Securities Dealers Automated Quotation (NASDAQ), which operates electronically without a centralized trading floor.
Major stock exchanges, such as the New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX), require companies to adhere to strict listing standards and securities traded on these exchanges are done so on their respective trading floors through a system known as open outcry. The OTC market, on the other hand, allows companies more flexibility and typically includes instruments such as government savings bonds, small CDs, OTC stocks, and more.
The OTC markets offer different types of financial instruments, which might be more accessible to smaller or newer companies that do not meet the criteria or do not wish to incur the costs associated with the major stock exchanges.