Which type of market does the over-the-counter market represent?

The over-the-counter (OTC) market is best described as a negotiated market. In this type of market, transactions are made directly between parties, typically facilitated by brokers or dealers who negotiate prices and terms rather than conducting trades through a centralized exchange. This allows for flexibility in the pricing and trading of securities, often involving less standardized instruments such as derivatives or less liquid stocks.

In the OTC market, the pricing and terms are agreed upon through direct negotiation, unlike an auction market where potential buyers and sellers place bids and offers that are matched by an exchange. The nature of the OTC market necessitates a level of negotiation that is characteristic of this type of trading, distinguishing it from other market structures.