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Which of the following statements regarding transaction cost measurement is true? The gaming problem can be avoided by averaging across many transactions. All estimation methods
- Which of the following statements regarding transaction cost measurement is true?
- The gaming problem can be avoided by averaging across many transactions.
- All estimation methods produce noisy results when applied to single trades.
- It is not possible to obtain negative transaction cost estimates.
- Both A and B.
- All of the above.
- Transaction costs measured relative to some benchmark may be systematically high or low depending on whether the investor pursues momentum or contrarian trading strategies. Which of the following statement/s is/are true?
- Investors pursuing contrarian trading strategies are more likely to underestimate their transaction costs when the opening price is used as the benchmark.
- Investors pursuing contrarian trading strategies are more likely to overestimate their transaction costs when the volume weighted average price is used as the benchmark.
- Investors pursuing momentum trading strategies are more likely to underestimate their transaction costs when the opening price is used as the benchmark.
- Both A and B.
- All of the above.
- Empirical studies have documented investors reluctance to sell their under-performing stocks. Which of the following behavioural bias can be used to explain this?
- Anchoring effect
- Endowment effect
- Hindsight bias
- All of the above
- None of the above
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