What does market depth indicate and how does it affect the execution of large trades?

What does market depth indicate and how does it affect the execution of large trades?

• A. Market depth shows liquidity at each price level; deeper markets support larger trades with less price impact.
• B. Market depth is the best bid/ask only; deeper markets increase price impact.
• C. Market depth refers to time to execution; deeper markets slow trades.
• D. Market depth tracks volume on every trade; deeper markets mean higher transaction costs.

Answer: (A)