Briefly explain the difference between a broker and a dealer in the stock market.

CPA-Financial-Management-Section-3 Revision kit

Difference between a broker and a dealer
– a broker buys and sells shares on behalf of the investors as an agent. A dealer buys shares on his own behalf as a principal
– a broker earns commission based on % of value transaction. A dealer earns profits being the difference between selling and buying prices.
– The returns of brokers is not influenced by changes in share price unlike that of dealers.
– Brokers give investment advice to members of the profit but dealers cannot.

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