CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

Which statement is false?
A. Small bid-ask spreads indicate low costs of trading.
B. A dealer's spread may be smaller than the market spread for the same security.
C. A market order does not allow any control over prices.
Explanation: A: Bid-ask spreads are an implicit cost of trading. B: The market spread is never more than any dealer's spread. C: The market order is filled at the best price available at the relevant time.

User Contributed Comments 6

User Comment
toto123 dealer will run at a loss...so B is correct!
leftcoast Whether the dealer will run a profit or loss has nothing to do with it. B is correct because if a dealer changes his spread so that it's smaller than the market spread, the dealer's spread will automatically become the market spread.
acemaj nice one left coast
Sam123456 Nice left hook left coast!
jjhigdon Also, the dealer WILL make a profit on the market spread because it is buying at the bid (the low price) and selling at the ask (high).
jnptrsn1 I answered A because the brokers fee could be incredibly high for some reason.
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