Uniform Securities Agent State Law (Series 63) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Study for the Uniform Securities Agent State Law Exam (Series 63). Prepare with flashcards, multiple-choice questions, hints, and explanations. Equip yourself to ace your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What is the main function of a dealer in the securities market?

Buying for customer accounts
Selling securities exclusively
Buying and selling securities for their own inventory
Acting solely as an agent for brokers

The correct answer is: Buying and selling securities for their own inventory

The main function of a dealer in the securities market is to buy and sell securities for their own inventory, which is accurately captured in the selected answer. Dealers play a pivotal role in providing liquidity to the markets. By maintaining an inventory of securities, dealers facilitate transactions by being ready to buy from or sell to investors. This ability to trade from their own accounts allows them to quickly respond to market demands, helping to stabilize prices and ensure that investors can execute trades without significant delays. This function distinguishes dealers from brokers, who act solely as intermediaries, facilitating transactions between buyers and sellers without holding an inventory of their own. While dealers may also execute trades on behalf of customers, their primary responsibility includes using their capital to buy and hold securities, ultimately benefiting both their own financial interests and the overall efficiency of the market. Therefore, the correct understanding of a dealer's role emphasizes their active participation in market transactions through inventory management and direct trading activities.