A purchaser of stock from a market-maker in that stock can expect to pay:

Prepare for the Canon Financial Institute CFIRS Exam with flashcards and multiple choice questions. Each question comes with hints and explanations for better understanding. Get ready to excel in your exam!

When purchasing stock from a market-maker, a purchaser can expect to pay a markup. Market-makers facilitate the buying and selling of stocks by providing liquidity in the market and are allowed to earn a profit on the transactions they facilitate. This profit is typically realized through a markup on the price at which they sell securities.

A markup is the difference between the price at which the market-maker buys the stock and the price at which they sell it to the purchaser. This markup compensates the market-maker for the risks they take by holding inventories of stocks and for the services they provide in making trades possible. Since the market-maker buys and sells directly in the market, they do not charge an additional commission separately; the markup effectively serves that purpose.

This understanding of the functions of market-makers and the nature of stock transactions clarifies why a purchaser can expect to pay a markup rather than a commission or a combination of both.

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