All else equal,a more liquid stock will have a lower ________.
A) beta
B) market premium
C) cost of capital
D) Both beta and market premium.
E) Both beta and cost of capital.

Question

Quizplus · Accepted Answer

A more liquid stock has a lower cost of capital because it is easier to buy and sell, which reduces the risk to investors. A more liquid stock also has a lower beta, which measures the volatility of a stock relative to the market.

All Else Equal,a More Liquid Stock Will Have a Lower