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.

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Definitions:

CFA Institute Standards

Ethical and professional guidelines set by the CFA Institute that provide a framework for the conduct of investment professionals.

Professional Conduct

The behavior expected from members of a profession, upholding ethical standards and practices.

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An organization or system that governs and implements policies in a society or a specific geographic area.

Return Requirements

The minimum level of income or profit desired by an investor from their investments.