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

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.

Quizplus · Accepted Answer

Market liquidity can be measured using trading turnover, which is the total amount of a security that has been bought and sold during a period of time. A higher trading turnover indicates a more liquid market. Bid-ask spread is another measure of liquidity, which represents the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept for a security. A lower bid-ask spread indicates a more liquid market, as there is less of a gap between buyers and sellers. Therefore, choice D is the best choice as it includes both trading turnover and bid-ask spread in measuring market liquidity.

The Market Liquidity of a Security Can Be Measured Using