(I)The Total Cost of Carrying Out a Transaction in Financial

question 2

Multiple Choice

(I) The total cost of carrying out a transaction in financial markets increases proportionally with the size of the transaction.
(II) Financial intermediaries facilitate diversification when an investor has only a small sum to invest.

• A) (I) is true; (II) false.
• B) (I) is false; (II) true.
• C) Both (I) and (II) are true.
• D) Both (I) and (II) are false.

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Definitions:

Common Stock

An equity ownership interest in a corporation, typically giving holders voting rights and a share in the company's profits via dividends.

Retained Earnings

Retained earnings refer to the portion of net income that is kept by a company to reinvest in its business or pay down debt, instead of being distributed to shareholders as dividends.

Dividends

Disbursements issued by a company to its stockholders, typically sourced from the enterprise's earnings.

FOB Destination

A shipping term indicating the seller is responsible for the goods until they reach the buyer's specified location.