Studies of Liquidity Spreads in Security Markets Have Shown That

Multiple Choice

Studies of liquidity spreads in security markets have shown that

A) liquid stocks earn higher returns than illiquid stocks.
B) illiquid stocks earn higher returns than liquid stocks.
C) both liquid and illiquid stocks earn the same returns.
D) illiquid stocks are good investments for frequent, short-term traders.
E) None of the above are true.