这个跟explicit cost有什么关联呢？

问题如下：

Soehnges outlines the following three practices that help manage transaction costs when buying and selling shares:

• Practice I: Commissions are variable by broker and market, but we endeavor to control trading costs by limiting commissions to 10 basis points of the transaction.
• Practice II: We do not employ our own traders. A team within our compliance department monitors and approves brokers who may be utilized. Portfolio managers submit their orders directly to one of the approved brokers.
• Practice III: Brokers’ trade executions are continuously evaluated by calculating the difference between each trade price and the prevailing midquote price, as well as by the difference between each trade price and the average price received by other traders at the time we are trading.

Which of Soehnges’s three procedures for managing transaction costs is least likely referring to an explicit component of execution costs? (2

选项：

A.

Practice I

B.

Practice II

C.

Practice III

解释：

C is correct. Explicit costs are the direct costs of trading, such as commission costs or fixed trading costs, including the cost to employ buy-side traders, and costs for which a trader could receive a receipt. Implicit costs, by contrast, are indirect costs associated with the market impact of trading. One measure of an implicit cost is the effective spread, which compares the difference between the trade price and the midpoint of the bid and the ask prices at the time the order is entered. Another is the VWAP benchmark, which compares the price obtained compared with other traders trading at the same time.

A is incorrect. These are explicit trading costs.

B is incorrect. These are explicit trading costs.