Which One of the Following Is NOT a Trading Cost

question 10

Multiple Choice

Which one of the following is NOT a trading cost?

• A) payment of brokerage commissions and other fees
• B) The investor must buy from the trader at the trader's high sell price and must sell to the trader at the trader's low bid price.
• C) When the market is not very liquid, and an investor's trade is a relatively large one, it can adversely affect the price the investor gets.
• D) The price on the trade falls when the investor buys or rises when the investor sells.

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Definitions:

Stock Price

The current market price at which a share of stock can be bought or sold.

Underwriting Spread

The difference between the price at which underwriters purchase new securities from the issuer and the price at which these securities are sold to the public.

Residual Claim

A financial term referring to the right of shareholders to claim what remains of a company's assets after all debts have been paid in the event of liquidation.

Common Stockholders

Common stockholders are investors who own shares of a company's common stock, granting them the right to vote at shareholder meetings and receive dividends.