A disadvantage of a non-continuous market is that
A)it requires a large number of market-makers , who must be rewarded for their risk exposure.
B)it has higher fixed costs that are passed on to traders in the form of commissions.
C)traders may not be able to buy or sell their securities in a timely fashion, and the price may change in the interim.
D)all of the above

Question

Quizplus · Accepted Answer

A non-continuous market means that trades are not constantly and immediately executed, but rather occur at specific intervals. This can lead to a delay in the execution of trades, which can result in the price of the security changing before the trade is completed. This can be a disadvantage for traders who may not be able to buy or sell their securities in a timely fashion, and may have to settle for a different price or not complete the trade at all. Options A and B are not necessarily drawbacks of a non-continuous market, but rather characteristics that are associated with market-making in general. In a non-continuous market, the lack of constant trading can cause delays in executing trades, leading to potential price changes in the interim. This can be a disadvantage for traders who need to buy or sell securities quickly. Option A and B are not necessarily disadvantages of a non-continuous market, but rather specific challenges that come with it. Option D is incorrect because only one option (C) is a valid disadvantage of a non-continuous market.

A Disadvantage of a Non-Continuous Market Is That