Round Trip Transaction Costs

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Round Trip Transaction Costs

All commissions and other expenses related to trading a security. When an investor buys or sells a security, he/she must usually pay a fee to his/her investment adviser, who may or may not also be the broker, who is also entitled to a fee. Research and other indirect costs informing investment decisions are not usually considered transaction costs unless they directly relate to or result from a specific transaction. The investor accounts for these expenses when calculating whether an investment made a profit or loss. See also: All in Cost.
References in periodicals archive ?
If securities dealers expect that the ex-dividend capital loss will be less than the dividend, then they may buy the stock cum-dividend and sell it ex-dividend, provided that expected trading profits exceed round-trip transaction costs.
Our proxy for round-trip transaction costs is bid-ask spread.
Short-term trading, either by securities dealers or by taxable corporations, implies that abnormal volume in a stock should be positively related to its dividend yield and negatively related to round-trip transaction costs.