Market impact is defined as?

Market impact refers to the change in the price of a security that occurs as a result of a trade or a series of trades. When a large order is placed in the market, it can affect the supply and demand dynamics, leading to a price movement. This is particularly significant in less liquid markets, where even a moderate-sized transaction can lead to a noticeable change in price.

Choosing the option that defines market impact as "how much price moves after trade takes place" accurately captures the essence of this concept. It directly addresses the relationship between trading activity and its effect on the price of an asset, highlighting the immediate consequence of trading behavior on market prices.

In contrast, other options focus on different aspects of market behavior. The growth of the market over time, for instance, refers to long-term trends rather than the immediate repercussions of trading. Similarly, the overall effect of market trends on prices encompasses broader economic and seasonal influences, rather than the direct impact from individual trades. Lastly, volatility relates more to the degree of variation in trading prices over time, not specifically how trades impact prices. Thus, the correct choice specifically centers on the tangible effect that trading has on pricing dynamics.