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Why are transaction cost important?

Updated: 4/28/2022
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10y ago

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Transaction costs are important to investors because they are one of the key determinants of net returns. ... Different asset classes have different ranges of standard transaction costs and fees. All else being equal, investors should select assets whose costs are at the low end of the range for their types.

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Muneeswaran Thavaman...

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2y ago
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Hilbert Boehm

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2y ago
great answer, tyy! ?
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Cordie Wolff

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2y ago
great answer thank youu ?
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10y ago

A transcation cost is a cost incurred in making an economic exchange. It is divided into many broad categories including search and information costs, bargaining costs and policing and enforcement costs. The though of Transaction cost have been coined by Ronald Coase who used it for developing a theoritical framekwork for predicting when certain economic tasks would be performed by the firms and for performing in the market.

According to Williamson, the determinants of transaction osts are frequency , specificity, uncertainity, limited rationality and opprotunistic behavior.

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Muneeswaran Thavaman...

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2y ago

Transaction costs are important to investors because they are one of the key determinants of net returns. ... Different asset classes have different ranges of standard transaction costs and fees. All else being equal, investors should select assets whose costs are at the low end of the range for their types.

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