What is the primary function of market makers?

The primary function of market makers is to facilitate liquidity by buying and selling securities. Market makers play a crucial role in financial markets by ensuring that there is a consistent supply and demand for securities. They do this by committing to buy and sell specific amounts of a security at publicly quoted prices, which helps to narrow the bid-ask spread and allows trades to occur smoothly.

Liquidity is essential for the functioning of markets, as it enables investors to enter and exit positions without causing significant price movements. By providing this liquidity, market makers help maintain an efficient market environment where transactions can be executed quickly and effectively.

While analyzing market trends, guaranteeing profits, and issuing ratings are important activities in financial markets, they do not represent the primary function of market makers as their main role is centered around facilitating trading and ensuring liquidity. Thus, the correct answer reflects the essential role of market makers in maintaining a healthy and fluid market for investors.