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Exam 2016-FRR Topic 1 Question 89 Discussion

Actual exam question for GARP's 2016-FRR exam
Question #: 89
Topic #: 1
All of the following factors generally explain the equity bid-offer spread in a market EXCEPT:

Suggested Answer: B Vote an answer

The equity bid-offer spread in a market is influenced by several factors:
* Market Volatility:
* Higher volatility generally widens the bid-offer spread as market makers hedge against increased risk.
* Competition Among Market Makers:
* Increased competition usually narrows the spread due to better prices offered to attract trades.
* Market Depth:
* Deeper markets with more participants and higher trading volumes typically have narrower spreads.
Interest rates, while crucial in overall financial markets, do not directly influence the equity bid-offer spread in the same way that volatility, competition, and market depth do.
ReferencesSource: How Finance Works

by Odelia at Apr 01, 2025, 08:53 AM

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