Q219
If trading of municipal bonds is infrequent, then secondary market is considered as
A.
thin markets
AnswerB.
thick markets
C.
higher underwriting
D.
lower underwriting
Answer: Option A
Solution
Answer: Option A
Solution:
If trading of municipal bonds is infrequent, then secondary market is considered as thin markets. A thin market is a market with few buying or selling offers. It is also known as a narrow market. The signature characteristic of a thin market is traders' price impact. When the number of buying or selling offers is small, investors' trading positions are large relative to market size.