The High Volume of Shares of Stock That Are Traded

question 110

Multiple Choice

The high volume of shares of stock that are traded on a normal day on stock markets reflects the:

• A) high transaction costs associated with these financial markets.
• B) low transaction costs and high liquidity associated with these markets.
• C) low transaction costs and low liquidity associated with these markets.
• D) high transactions costs and low liquidity associated with these markets.

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Definitions:

Discount Rate

It refers to the rate used in discounted cash flow analysis for the purpose of calculating the present value of future expected cash flows.

Preferred Stock

A type of stock that provides a fixed dividend before any dividends are paid to common stockholders and usually has no voting rights.

Debt

A sum of money lent by one individual to another, with the agreement that it will be returned at a future time, typically with additional interest.

Sinking Fund

Account managed by the bond trustee for early bond redemption.