Multiple choice

Which of the following transaction costs are not quantified in the offer document?

  1. Brokerage commissions

  2. Dealer spreads

  3. Custodian's fees

  4. Registrar's fees
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Dealer spreads (bid-ask differences) are implicit transaction costs that vary with each trade and are difficult to quantify precisely in advance. Brokerage commissions, custodian fees, and registrar fees are fixed or determinable costs that can be stated in offer documents. Dealer spreads depend on market conditions and security liquidity at trade time.

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