Question

which of the following is true of a market maker?
market makers simultaneously quote a bid price and an ask price for a security.
market makers help private companies to find capital investors.
market makers determine if a company is eligible to issue an ipo.
market makers reduce the risk that a company going public will have a weak ipo

Explanation:

• The first option: Market makers' role includes providing liquidity by quoting bid (price to buy) and ask (price to sell) prices for securities, enabling trading.
• The second option: Helping private companies find capital investors is more related to investment bankers or private placement agents, not market makers.
• The third option: Determining IPO eligibility is done by regulatory bodies and underwriters, not market makers.
• The fourth option: Reducing IPO - related risks is not a core function of market makers; underwriters and other entities are more involved in IPO risk management.

Answer:

Market makers simultaneously quote a bid price and an ask price for a security.