Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter3: Risk And Return: Part Ii
Section: Chapter Questions
Problem 9MC: What is a characteristic line? How is this line used to estimate a stocks beta coefficient? Write...
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Question
When forming a portfolio, investors need to consider liquidity of the financial
security. A famous financial economist Maureen O’Hara emphasizes how difficult it is to define liquidity. One of the common measures of liquidity is bid-ask spread (a difference between bid and ask price). Why do you think bid-ask spread is considered as a measure of liquidity? How else can you measure a stock’s liquidity?
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