CFA Level 1
Equity Investments

Understanding Quote-driven Markets in Equity Exchanges

Very Hard Equity Markets And Instruments Stock Exchanges

In the landscape of global equity markets, stock exchanges serve various critical functions that differentiate them from one another. Among these functions, market makers, the role of trade execution, and the dissemination of price information are vital. However, not all exchanges operate under the same structural framework. One notable distinction can be made between order-driven and quote-driven markets. Which of the following statements accurately captures a feature unique to quote-driven markets as opposed to order-driven markets?

Hint

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