Studies of Liquidity Spreads in Security Markets Have Shown That

question 52

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.
• E)None of the above are true.

---

Definitions:

Conspicuous Consumption

The practice of purchasing and using goods of higher quality or quantity than needed, to display wealth or social status.

Louis Vuitton

A luxury fashion brand founded in France, known for its leather goods, high-end clothing, and accessories, characterized by distinctive designs and craftsmanship.

Assets

Economic resources or valuable items owned by individuals or organizations that have potential or actual value and can contribute to wealth.

Wealth

An abundance of valuable resources or material possessions, or the control of such assets.