Financial Awareness - Risk, Stability & Emerging Finance
Which of the following is TRUE regarding the difference between a Broker and a Dealer in the Indian securities market?
Which of the following is TRUE regarding the difference between a Broker and a Dealer in the Indian securities market?
hard Q9 of 15
Step-by-Step Solution
Step 1: Define broker and dealer roles
Brokers act as agents executing trades on behalf of clients, earning commission. Dealers trade securities on their own account, earning profits from price differences.Step 2: Analyze options
Option stating broker trades on own account is incorrect. Both acting only as agents or only on own account is also incorrect.Step 3: Confirm correct distinction
The correct distinction is broker as agent and dealer as principal trader.Final Answer:
A broker acts as an agent for clients; a dealer trades securities on own account → Option AQuick Check:
Broker vs Dealer = agent vs principal trader ✅
Quick Trick: Broker = agent; Dealer = principal trader on own account.
Common Mistakes:
- Confusing broker and dealer roles in trading.
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