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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