Turnover is inversely related to the costs of trading stocks because

Question

Quizplus · Accepted Answer

High trading costs cause investors to trade less because it reduces their potential profit margins or increases their losses. Therefore, as the costs of trading stocks increase, investors become more cautious and trade less frequently, resulting in lower turnover. Conversely, lower trading costs can encourage more frequent trading and higher turnover because investors can more easily buy and sell securities without incurring significant transaction costs.

Turnover Is Inversely Related to the Costs of Trading Stocks