The overall goal of are to provide a means of connecting investors with those who will utilize the funds to increase the future cash value for these investors (Ehrhardt & Brigham, 2015). This topic compares the Dealer Markets and Physical Stock Markets. Focusing on Physical Stock Markets first, as my attachment shows, the most notable example includes the New York Stock Exchange – a physical trading location which allows individuals called brokers act as intermediaries between buyers and sellers (Ehrhardt & Brigham, 2015).
Dealer markets, on the other hand, exists where deal makers utilize their own funds to facilitate traders between buyers and sellers (Kenton, 2019). These transactions can occur within seconds because orders are placed by both buyers and sellers, and the dealer performs the match (Ehrhardt & Brigham, 2015). A margin is gained because of the variances in bid and ask prices based on leverage and volume. Nasdaq is the example used in my slide. Therefore, the fundamental difference between Dealer Markets and Stock Markets are HOW the transactions are executed between the buyers and sellers.
From inception to now, it is clear that both of the systems have changed and adapted with the introduction of technologies that allow for the execution of near-instantaneous transactions and contracts between buyers and sellers (Ehrhardt, 2015).
References
Ehrhardt, M. C., & Brigham, E. F. (2015). Corporate finance a focused approach (6 ed.). Boston, MA: Cengage Learning.
Kenton, W. (2019, July 6). Dealer Market. Retrieved from https://www.investopedia.com/terms/d/dealersmarket.asp
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