Future Business Leaders of America (FBLA) Securities and Investments Practice Test

Who is considered the dealer in stock transactions?

1. The person who sets the prices for stocks

2. The individual or firm facilitating trade by standing ready to buy or sell

3. The investor who executes trades via an online platform

4. The government agency regulating securities

The correct answer is: The individual or firm facilitating trade by standing ready to buy or sell

The dealer in stock transactions is defined as the individual or firm that facilitates trade by standing ready to buy or sell securities at any time. This role is crucial in the financial markets as dealers provide liquidity, meaning they are always available to make transactions, whether it involves buying or selling stocks. Dealers take on the risk of holding stocks and are often known for posting buy and sell prices for these securities, enabling other market participants to execute their trades efficiently. This ensures that investors and traders have the ability to buy or sell shares without facing significant delays or gaps in pricing. In contrast, individuals who merely execute trades online are acting as clients or customers rather than dealers, as they rely on the services provided by brokers or dealers to carry out their transactions. The government agencies that regulate securities oversee market practices but do not themselves engage in the trading of stocks. Therefore, the accurate identification of a dealer focuses on their role in facilitating transactions within the market.