problem with C is what if you want to only trade 1 stock. then program trading isn’t even applicable. so it’s cheaper than what???.. D is always cheapest, but usually not feasible… so the whole questioning process is flawed.
the answer is C. This is from schewser study session 10 concept checkers question2. I got D too, as I was referring to Page 30, it is clearly written advantage of internal crossing is utilizing internal corrsing networks minimizes execution costs. the only question is is it a popluar trading style for institutions??
any supporters of C can plz explain?
yeah, the “best minimized” is so vague. i guess internal crossing isn’t feasible in most cases, so it’s a “poor” alternative… but again, it’s a question where most can explain the answer but we’re at mercy of ambiguous wording. it’s like we’re in law school or something, but they don’t teach it that way, only test it that way.
singlesong80 Wrote: ------------------------------------------------------- > the answer is C. This is from schewser study > session 10 concept checkers question2. I got D > too, as I was referring to Page 30, it is clearly > written advantage of internal crossing is > utilizing internal corrsing networks minimizes > execution costs. the only question is is it a > popluar trading style for institutions?? execution costs are minimum if you get filled but you can not guarantee that. it’s similar to buying on a limit - you buy at a better price but the risk is that the market will go up before you get filled. option C allowed minimizing costs without the risk of not getting filled.
westbruin Wrote: ------------------------------------------------------- > i still don’t understand what “coon practice” is > in the final sentence of op’s entry Definitely not politically correct SingleSong. Best go back over the ethics section. Maybe some plastic wrap over the keyboard would help.
singlesong80 Wrote: ------------------------------------------------------- > any supporters of C can plz explain? Program trading involves a sale of a basket of securities, so the broker should be less concerned about risk that the seller is motivated by inside info…less risk would result in lower bid-ask spread. Therefore C works. Internal Crossing also lowers execution cost, but I’m guessing he meant to say: D. “Internal crossing networks since buying and selling the same security is common practice for large institutional money managers.” It is NOT common practice as it is it is rare for internal cross to happen and also difficult to justify a sell order and a buy order to another (can’t favor one client over the other). Therefore D wouldn’t work if my assumption of what it actually read is correct.