01618cas a2200241 a 4500 AALejournalIMF003929 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451854879 1018-5941 BD-DhAAL BD-DhAAL Kramer, Charles. Noise Trading, Transaction Costs, and the Relationship of Stock Returns and Trading Volume / Charles Kramer. Washington, D.C. : International Monetary Fund, 1994. 1 online resource (36 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students The relationship of stock returns and trading volume is the focus of much recent interest. I examine an economic model of a rational trader who operates in a market with transactions costs and noise trading. The level of trading affects the rational trader's marginal cost of transacting; as a result, trading volume is a source of risk. This engenders an equilibrium relationship between returns and volume. The model also provides a simple way to scrutinize this relationship empirically. Empirical evidence supports the implications of the model. Mode of access: Internet IMF Working Papers; Working Paper ; No. 1994/126 Full text available on IMF http://elibrary.imf.org/view/journals/001/1994/126/001.1994.issue-126-en.xml IMF e-Library