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A national regulator is developing a set of indicators to serve as warning signs that the liquidity of the stock market could be decreasing. The regulator is particularly concerned about the potential for a "liquidity black hole" to develop which could destabilize the stock market. Which of the following observations would be of greatest concern to the regulator as a signal of a potential liquidity black hole occurring?
A
A majority of large investors increasingly follow a trend-following trading strategy
B
Brokerage firms purchase call options as a hedge against the sale of a large number of put options to institutional investors.
C
Portfolio managers sell stocks that have increased in value and reached their price target.
D
Bid-ask spreads for less liquid stocks become narrower.