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Round Lot

A round lot refers to a standardized number of shares or units of a security that is traded on an exchange, typically in multiples of 100. Round lots are the most commonly traded block of shares and are preferred by institutional investors because they offer better liquidity and lower transaction costs. In contrast, odd lots are smaller quantities of shares, usually less than 100, and may face higher transaction fees or difficulty in execution.

Example

A round lot of 100 shares of a publicly traded stock is purchased by an institutional investor to minimize transaction costs and ensure liquidity.

Key points

• A standardized number of shares or units, usually in multiples of 100.

• Provides better liquidity and lower transaction costs than odd lots.

• Preferred by institutional investors for large trades.

Quick Answers to Curious Questions

They offer better liquidity and lower transaction costs, making it easier to execute large trades efficiently.

A round lot consists of standardized quantities (e.g., 100 shares), while an odd lot is less than a standard lot and may face higher fees.

Round lots are easier to trade on exchanges due to their standardized size, improving liquidity and reducing transaction costs.

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