What is the main characteristic of a designated market maker?

A designated market maker (DMM) plays a crucial role in facilitating liquidity and orderly trading on an exchange. Their primary function is to ensure that there is a continuous market for the stocks for which they are responsible. By standing ready to buy and sell shares, they help maintain a fair and efficient market, allowing other traders to transact without significant delays or price fluctuations.

In this context, the first option accurately describes the DMM's main characteristic, as they are specifically tasked with facilitating trading in the secondary market, working to match buyers and sellers of securities and providing the necessary support for smooth transactions.

The other options do not align with the main role of a designated market maker. For example, guaranteeing profits for investors is not a function of any market participant, as trading entails risks, and profits are not assured. Additionally, designated market makers are not restricted to trading only municipal bonds; they typically work with a variety of securities listed on an exchange. Hence, the correct answer highlights the essential duty of a designated market maker in supporting market activity.