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Finance Glossary

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Market Maker

Definition:

A market maker "makes a market" in a given security. That is, some guy at the NYSE put up a few million dollars of his own money to buy and sell shares of GM. He has various rules he must follow and as long as he is a good boy, he can offer GM at $34.12 (where he is a seller) and bid for GM at $34.02 where he is a buyer - and live off of the dime per share spread. He'll need a lot of dimes to pay his bills.

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