Transaction costs are likely to be HIGHEST for:

Question

BlackTom AI · Accepted Answer

The question asks us to compare transaction costs across different asset classes, identifying where these costs would be the highest.
Option 1: stocks. In equities, transaction costs include bid-ask spreads, explicit commissions or broker fees, exchange fees, and possible price impact from executing trades, all of which can be substantial, especially for large orders or less liquid stocks. These costs tend to be higher in comparison to many other asset classes because stocks trade frequently and the market depth can vary.
Option 2: loans. Trading loans (or loan portfolios) is typically done over-the-counter among institutions, and while there can be origination fees or exit costs, the day-to-day transaction costs for buying or selling loans are generally lower and less standardized than in the equities market. Liquidity is often limited, but when considering typical retail costs, these are not as high as those seen in stock trading.
Option 3: bank deposits. Deposits are highly liquid and usually incur minimal explicit costs for moving money (if any, depending on the institution and account type). There is rarely a price to pay for simply transferring funds between accounts or withdrawing, so transaction costs are typically among the lowest.
Option 4: bonds. Bond markets do incur transaction costs, including bid-ask spreads and sometimes broker or settlement fees, but these costs are often smaller on a per-dollar basis than those encountered in highly active stock trading, especially for widely traded government or high-grade corporate bonds. Illiquid or smaller issues can raise costs, yet they generally do not reach the levels seen in broad stock trading.
Overall, considering the typical structure of these markets, the combination of wide bid-ask spreads, brokerage charges, and potential market impact makes stock transactions the most cost-intensive scenario among the options provided.

Transaction costs are likely to be HIGHEST for:

查看解析

登录即可查看完整答案

类似问题

Active traders on Robinhood tend to ...

The expenses involved in actually putting together and executing a deal are called _____.

What is the cost of 100 shares of Jiffy, Inc. stock given that the bid-ask prices are $31.25 – $32.00 and a $15.00 commission per transaction exists?

In a consumer society, many adults channel creativity into buying things

Economic stress and unpredictable times have resulted in a booming industry for self-help products

People born without creativity never can develop it

A product has a selling price of $20, a contribution margin ratio of 40% and fixed cost of $120,000. To make a profit of $30,000. The number of units that must be sold is: Type the number without $ and a comma. Eg: 20000

Which of the following statement regarding cost is correct:

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单