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1. Which of the following statements regarding transaction cost measurement is true?

1. The gaming problem can be avoided by averaging across many transactions.
2. All estimation methods produce noisy results when applied to single trades.
3. It is not possible to obtain negative transaction cost estimates.
4. Both A and B.
5. All of the above.

2. Transaction costs measured relative to some benchmark may be systematically high or low depending on whether the investor pursues momentum or contrarian trading strategies. Which of the following statement/s is/are true?

1. Investors pursuing contrarian trading strategies are more likely to underestimate their transaction costs when the opening price is used as the benchmark.
2. Investors pursuing contrarian trading strategies are more likely to overestimate their transaction costs when the volume weighted average price is used as the benchmark.
3. Investors pursuing momentum trading strategies are more likely to underestimate their transaction costs when the opening price is used as the benchmark.
4. Both A and B.
5. All of the above.

3. Empirical studies have documented investors reluctance to sell their under-performing stocks. Which of the following behavioural bias can be used to explain this?

1. Anchoring effect
2. Endowment effect
3. Hindsight bias
4. All of the above
5. None of the above

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