Investor Glossary-transaction costsInvestor Glossary-transaction costsInvestor Glossary-transaction costsInvestor Glossary-transaction costsInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Transaction Costs

The HTML to link to this page
 

Transaction costs are costs incurred to complete a financial transaction. In financial markets, the primary transaction costs are commissions paid to brokers for trade execution. Other transaction costs include paying the spread, or the difference between what it costs to buy an asset and what the asset can be sold for. Transaction costs become increasingly important the shorter the holding time of an investment.

Many market models ignore transaction costs, assuming instead that markets are frictionless. While not strictly true, for many applications transaction costs are low enough that they can be ignored. The lower the transaction costs, the more efficient a market is said to be. Stock and foreign exchange markets have the lowest transaction costs of any major asset class.



Rate this transaction costs definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: average price per share, quality assurance, 144a, VIX, limit order, inflation, labor relations, reverse mortgage, in escrow, diluted share, ex-dividend, wholly-owned subsidiary, APR, deferred tax, FTSE, 1031 exchange, ex-dividend date, per diem, open position, debt service coverage, retained earnings, margin rate, Zero Cost Collar, balance sheet, liquidity ratio, implied volatility, required rate of return, irrevocable trust, 401a, dividends payable, option premium, stock split, real GDP, Key Rate Duration, phantom income, FICO score, annual return, stock market close, 1035 exchange, cancelled check, command economy, EBITDA, deferred revenue, covered put, class C shares, current ratio, LIBOR, risk management, minority interest


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2015 Investor Glossary - All rights reserved - Terms of Use