Derivatives Q7

0. Analyst 1: Market makers earn a profit in both exchange and over-the counter derivatives markets by charging a commission on each trade.
Analyst 2: Market makers earn a profit in both exchange and over-the counter derivatives markets by buying at one price, selling at a higher price, and hedging any risk.
Which analyst’s statement is most likely correct?

Answer
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Option : B
Explanation : Market makers buy at one price (the bid), sell at a higher price (the ask), and hedge whatever risk they otherwise assume. They do not charge a commission.

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