Ace the Canadian Securities Course 2025 - Rock the CSC Practice Exam!

The correct response highlights the characteristic of a dealer market where transactions are primarily facilitated by dealers who act as intermediaries in the buying and selling process. In a dealer market, dealers maintain an inventory of securities, enabling them to provide liquidity to investors. This structure is particularly prevalent in the trading of bonds, where liquidity and the ability to negotiate purchase prices are essential for market participants.

While stocks can also be traded in dealer markets, they are typically associated more with auction markets or exchanges where buyers and sellers interact directly. In contrast, the dealer market format excels in accommodating bonds due to their often larger denomination and less frequent trading compared to stocks, necessitating a robust intermediary to match buyers and sellers effectively.

Therefore, emphasizing the prevalence and nature of bond trading in dealer markets underscores the reasoning behind the correct answer.