The larger the dollar size block order,
A) the larger the percentage transaction cost.
B) the more quickly the transaction occurs.
C) the larger the price impact of increased price.
D) the less the price impact on small capitalization stocks.

Question

Quizplus · Accepted Answer

The larger the dollar size block order, the more impactful it is on the market's supply and demand dynamics, leading to a larger price impact. This is especially true for large-cap stocks that have a shallower order book, making the execution of large trades more challenging. Therefore, option C is the best answer as the price impact increases with the size of the trade.

The Larger the Dollar Size Block Order