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> The bond and equity markets are based on sound regulation, transparency... Presumably subprime mortgage backed securities are the exception that proves the r

• patrickk 16y ago
  The stock market is well regulated but the bond markets a lot less so, hence that's where Wall Street makes big profits (when times are good.) They make serious profits as 'market makers' (standing between buyers and sellers) with bonds.
  • grandalf 16y ago
    You view the bid/ask spread as an indicator of poor regulation? Not actually true. The spread reflects the willingness of firms to compete as market makers. More firms competing means a smaller spread. The spread also reflects the risk associated with the market maker holding inventory. The more perceived risk, the bigger the spread.
• dantheman 16y ago
  Exception that proves the rule means that since their is an exception a rule must exist. For instance - Tonight we got an exception and are allowed to stay out till 11pm, would imply that there exists a rule that forbids them staying out that late. Hence the exception proves the rule.