Which best defines a Dealer in the investment context?

• A. A company that only sells stocks
• B. A broker facilitating options trading
• C. A person or company grading securities as a principal or agent
• D. An organization overseeing market regulations

Answer: (C)

In the investment context, a dealer is best defined as a person or company that engages in securities transactions either as a principal, meaning they buy or sell securities for their own account, or as an agent, where they facilitate transactions on behalf of clients. This definition captures the dual role that dealers can play in the financial markets. They provide liquidity and facilitate trading by being willing to buy and sell securities at quoted prices, helping to ensure that the market functions smoothly.

The other options do not encompass the full scope of what a dealer does. Some options might refer to specific activities that do not include the broader definitions of a dealer's role in the market. For instance, while a company that only sells stocks may operate as a dealer, the definition is too narrow and excludes other types of securities and financial instruments that a dealer might handle. Similarly, a broker facilitating options trading describes a specific function within trading but does not illustrate the full capacities of a dealer. An organization overseeing market regulations refers to regulatory bodies, which have an entirely different role from what dealers do in trading. Therefore, the option that best captures the essence of a dealer in the investment context is the one that highlights their role in purchasing and selling securities as either a principal or an agent.