The market liquidity of a security can be measured using
A) Trading turnover.
B) Bid-Ask spread.
C) Price of the security.
D) a and b.
E) b and c.

Question

Quizplus · Accepted Answer

Both trading turnover and bid-ask spread are commonly used indicators of market liquidity. The trading turnover of a security measures the number of shares traded during a given period, while the bid-ask spread is the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. By combining these two measures, investors can get a more complete picture of a security's liquidity. The price of the security alone is not sufficient to measure liquidity.

The Market Liquidity of a Security Can Be Measured Using