The Size of the Spread on Stocks That Have Relatively

question 58

Multiple Choice

The size of the spread on stocks that have relatively little trading is

• A) smaller to reflect the lower degree of uncertainty.
• B) the same as that of stocks with higher volumes of trading.
• C) wider to reflect the higher degree of uncertainty.
• D) not affected by trading volume.

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Definitions:

Corporate Form

A legal structure for a business recognized as a separate legal entity from its owners, offering liability protection but with specific tax obligations.

Major Policy Decisions

Key strategic decisions made by a company's management or board of directors that affect the overall direction and policies of the organization.

Board of Directors

A group of individuals elected by the shareholders of a corporation to oversee the management and make major decisions affecting the company's policy and strategy.

Common Stockholders

Individuals or entities that own shares of common stock in a corporation, granting them voting rights and a share in the company's profits.