Alice works for Citadel, and her day-to-day job involves deciding and updating bid and ask prices...

Alice works for Citadel, and her day-to-day job involves deciding and updating bid and ask prices for a particular stock which is trading in NYSE, based on her own petition in that stock. That makes Alice a:

1. Principle

2.Floor Broker

3.Supplemental Liquidity Provider

4.Capitalist

5.Market maker.

Solutions

Expert Solution

Answer-

The correct answer is Option 5. Market maker

Market makers are dealers or traders whose role is to increase the liquidity of stocks and provide more liquid and efficient trading. Market makers facilitate competitive prices by deciding and updating bid and ask prices which assists investors in getting the best price.

Option 1 is incorrect as Principal acts when there is imbalance in markets by buying and selling from his/her own inventory to stabilize the market.

Option 2 is incorrect as Floor Broker A floor broker is an employee in a securities or brokerage firm who executes orders on the floor for a stock

Option 3 is incorrect as Supplemental Liquidity Providers (SLPs) are market participants who create high volume on exchanges to increase liquidity in the markets by using high speed computers and algorithms. SLPs are generally found in high liquid stocks with average daily trading volume of more than 1 million shares.

Option 4 is incorrect. A capitalist is a person who believes in capitalism which is a system of privately-owned businesses and profiting from businesses.

Therefore Alice is a Market maker in Citadel.

jeff jeffy answered 1 year ago

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