The Average Depth of the Limit Order Book Is ________

question 39

Multiple Choice

The average depth of the limit order book is ________.

• A) lower for the large stocks in the S&P 500 Index than for the smaller stocks in the Russell 2000 Index
• B) higher for the large stocks in the S&P 500 Index than for the smaller stocks in the Russell 2000 Index
• C) about the same for both the large stocks in the S&P 500 Index and the smaller stocks in the Russell 2000 Index
• D) unrelated to the sizes of the stocks in the indexes

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Definitions:

Nonsystematic Risk

The portion of investment risk that is unique to an individual asset or company, such as management decisions or product recalls, and can be mitigated through diversification.

Security Market Line

A graphical representation of the expected return of investments at different levels of risk, showing the relationship between risk and return in the capital asset pricing model.

Security Market Line

A graphical representation used in the Capital Asset Pricing Model (CAPM) that shows the relationship between the expected return of an investment and its risk.

Black, Jensen, and Scholes

Refers to the authors of a landmark study in finance, particularly known for their work related to the capital asset pricing model (CAPM) and option pricing theory.