I'm new at this, but learning. I have searched the web and the prior threads on this board, but I haven't been able to find answers to a few questions. If any of you can offer any insight, or point in a direction where I might find answers, thanks in advance. 1) (principally in regard to nasdaq, but nyse might apply) Do market makers hold an inventory of shares to sell, or do they borrow them as needed? ie, are they flat on the day, and have to go short to sell to buyers every morning (assuming there are any)? It seems like they must have a net position on strongly trending days, and if so how do they hedge the overnight risk? Do MM's "volunteer" to make a market in a particular stock, or are they assigned by the exchange? 2) In regard to ETF's (eg, QQQ) - is the value of the ETF pegged to the value of the underlying securities, or does it's value fluctuate independently according to demand for the ETF? I assume the latter, but doesn't that open up a lot of opportunity for inefficient pricing and arbitrage?