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A trader maintains a position in a small capitalization stock that has low trading volume. The trader has a high level of which of the following risks?

A) MarketB) LiquidityC) BusinessD) Inflation

1 Answer

3 votes

Answer:

B) Liquidity

Step-by-step explanation:

Liquidity is the ability of quickly buy or sell a stock without any price change.

Liquidity in a small-capitalization stock that has low trading volume is generally low that causes a problem for traders. It is so because in small capitalization, traders are unable to understand potential pitfalls and blindly invest in small-capitalization stocks which do not give profit as expected and the liquidity becomes low.

Hence, the correct answer is B) Liquidity.

User Ashish Doneriya
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