Studies of Liquidity Spreads in Security Markets Have Shown That

question 4

Multiple Choice

Studies of liquidity spreads in security markets have shown that

• A) liquid stocks earn higher returns than illiquid stocks.
• B) illiquid stocks earn higher returns than liquid stocks.
• C) both liquid and illiquid stocks earn the same returns.
• D) illiquid stocks are good investments for frequent, short-term traders.

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Definitions:

Abuse Of Process

The misuse of legal procedures for ulterior purposes, often to harass or oppress another party, rather than to achieve the legitimate aims of the process.

Debt

Money or goods or services owed by one party, the debtor, to another, the creditor.

Scienter

Knowledge or awareness of the wrongdoing or fraudulent nature of one’s actions, especially in relation to securities fraud.

Knowledge Of Falsity

Awareness that a particular statement or representation is false, which can be relevant in cases of fraud or deceit.