Question

"An OTC equity trader has received a large influx of sell orders for ABC stock and, to fill them, has taken an extremely large long position in the firm's inventory account. The dealer would most likely:"

Answer 1

Answer:

decrease the bid price in the OTCBB

Explanation:

Given that, the dealer's Bid price is too high, this is believed to be the reason behind the sellers trying to make orders. Hence, to reduce the orders, the dealer will lower the Bid price.

Hence, in this case, the best answer or alternative to be considered is that, the dealer would most likely decrease the bid price in the OTCBB, this is specifically to discourage the sellers.