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The cost of buying or selling a financial instrument measured in the context of its impact on the portfolio, including, at a minimum, any purchase or sale commission charged by the brokerage firm executing the trade and part of the spread between the bid and the asked prices. More sophisticated transaction cost measurement systems add the market impact of large trades and the opportunity cost of unexecuted trades. The most useful measurements of transaction costs include commissions and fees, market makers' spreads and opportunity costs associated with not transacting when a trade is not executed. See also Execution Cost, Market Impact.
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