The depth of a market is determined by
A) the ability to absorb the purchase or sale of a large number of securities.
B) the number of participants.
C) the ability to absorb the purchase or sale of a large dollar amount of securities.
D) the safety of principal.

Question

Quizplus · Accepted Answer

The depth of a market is determined by its ability to absorb the purchase or sale of a large dollar amount of securities. This means that the market has enough liquidity to handle large transactions without significantly impacting the price. The number of participants and safety of principal may be important factors in determining the overall health of the market, but they do not directly determine its depth.

The Depth of a Market Is Determined by