Which of the following will tend to increase transaction costs?
A) Buying or selling fewer than 100 shares at a time.
B) Buying or selling shares through an on-line broker.
C) Buying or selling more than 1000 shares in a single trade.
D) Buying or selling at times when volume is high and the exchanges are busy.

Question

Quizplus · Accepted Answer

Buying or selling fewer than 100 shares at a time will tend to increase transaction costs as brokers typically charge a fixed fee for each trade, which means that the cost per share will be higher for small transactions. Buying or selling more shares in a single trade can help spread this fixed cost over more shares, reducing the cost per share. Trading through an online broker can also lower transaction costs as they typically charge lower fees than traditional brokers. Buying or selling at times when volume is high and the exchange is busy can also increase transaction costs as the bid-ask spread may widen, leading to higher costs for the buyer or seller.

Which of the Following Will Tend to Increase Transaction Costs