Market Makers
In the OTC market, the term "spread" refers to the difference between:
Spread = ask minus bid. Dealer profits from the spread in principal transactions.
Complete Analysis & Legal Rationale
In the OTC market, the spread is the difference between the bid price (what the dealer will pay to buy) and the asked price (what the dealer will sell for). This spread represents the dealer's profit margin on transactions. A narrower spread indicates a more liquid market.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Matches the verified teaching point in the explanation.
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Does not match the governing concept in the explanation.
Official Standard: Outline-level citation pending rule-specific upgrade. Verify against current FINRA materials.