LeeBrittain
Member
Hi David,
I'm working through the practice questions on Dowd Chapter 14, and on problem 7.4, why is it that answer C is true? I.e. how does the bid ask spread reflect endogenous liquidity risk? Is this because with some scenarios, like with level II quotes, you can not only see the bid ask spread, but also the size of the potential orders?
Thanks,
Lee
I'm working through the practice questions on Dowd Chapter 14, and on problem 7.4, why is it that answer C is true? I.e. how does the bid ask spread reflect endogenous liquidity risk? Is this because with some scenarios, like with level II quotes, you can not only see the bid ask spread, but also the size of the potential orders?
Thanks,
Lee