Over-The-Counter markets primarily trade which type of securities?

Over-The-Counter markets primarily trade which type of securities?

• A. Listed securities on exchanges
• B. Unlisted securities
• C. Exchange-traded funds
• D. Government bonds

Answer: (B)

Over-The-Counter markets exist to trade securities that aren’t listed on formal exchanges. The defining idea is that these trades happen through a network of dealers rather than on a centralized exchange. That makes unlisted securities—the stocks that don’t appear on big exchanges—the primary type traded in the OTC space. These securities are often smaller or newer issuers, or instruments that don’t meet exchange listing standards, and they rely on dealer quotes to find buyers and sellers. In contrast, listed securities are bought and sold on exchanges, and exchange-traded funds are designed to be traded on those same public platforms. Government bonds often trade through a dealer network as well, but the standout characteristic of the OTC space is handling securities that are not listed on an exchange.

Over-The-Counter markets exist to trade securities that aren’t listed on formal exchanges. The defining idea is that these trades happen through a network of dealers rather than on a centralized exchange. That makes unlisted securities—the stocks that don’t appear on big exchanges—the primary type traded in the OTC space. These securities are often smaller or newer issuers, or instruments that don’t meet exchange listing standards, and they rely on dealer quotes to find buyers and sellers.

In contrast, listed securities are bought and sold on exchanges, and exchange-traded funds are designed to be traded on those same public platforms. Government bonds often trade through a dealer network as well, but the standout characteristic of the OTC space is handling securities that are not listed on an exchange.