Question

Which of the following are traded over-the-counter?

1. Municipal bonds, 2. Treasury bonds, 3. Corporate bonds, 4. Common stocks:

a. 1 & 2
b. 1 & 3
c. 1, 2, & 3
d. 1, 2, 3, & 4

Answer 1

The securities that can be traded over-the-counter include municipal bonds, corporate bonds, common stocks, and technically, Treasury bonds, although Treasury bonds are initially auctioned by the government and not released on the OTC market. Therefore, the correct answer is (d) all of the listed options: 1, 2, 3, & 4.

Step-by-step explanation:

The securities that are traded over-the-counter (OTC) are not traded on formal exchanges like the New York Stock Exchange or NASDAQ. Instead, they are traded via a network of dealers. Municipal bonds, corporate bonds, and common stocks can all be traded over the counter. It is also worth mentioning that while Treasury bonds can be traded on secondary markets, which may include OTC transactions, they are initially issued through an auction process by the U.S. Department of the Treasury and not on the OTC market.

Therefore, the correct answer to the question is (d) 1, 2, 3, & 4: Municipal bonds, Treasury bonds, Corporate bonds, and Common stocks are all traded over-the-counter.

A variety of securities can be traded OTC, and the OTC market provides a useful platform for smaller, less liquid securities that do not meet the criteria to be listed on more formal exchanges. In the context of common stocks, some small-cap or micro-cap stocks that do not meet exchange listing requirements are often traded on the OTC markets.