Small investors face
A) high transactions costs in financial markets.
B) low transactions costs in financial markets.
C) high transactions costs in financial intermediaries.
D) high information costs in financial intermediaries.

Question

Quizplus · Accepted Answer

Small investors typically have limited financial resources, which means that they cannot take advantage of economies of scale in financial trading. This translates to higher transaction costs when they buy or sell stocks or other financial assets. Large institutional investors, on the other hand, can negotiate lower rates due to their larger trading volumes. Therefore, small investors face high transactions costs in financial markets.

Small Investors Face