CFA Practice Question

There are 294 practice questions for this study session.

CFA Practice Question

Liquidity affects ______.

I. brokerage commission
II. bid-ask spread
III. price impact
A. I and II
B. II and III
C. I, II and III
Explanation: All three are components of the cost of trading but brokerage commission is usually negotiable.

User Contributed Comments 4

User Comment
ksnider what is the price impact?
dini85 if there is no liquidity.. you will not be able to sell it at the fare market value.. which is price impact.
cwong2013 commission is also dependent on the size of the trade- which is directly related the liquidity of the assets listed.
enetis agreed cwong... brokers will charge you a higher rate for illiquid securities
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