Trading, Accounts & Prohibited ActsQuestion 176 of 398
In a quoted market, the bid-ask spread represents which of the following?
a.The commission charged by the broker
b.The difference between the highest price a buyer will pay and the lowest price a seller will accept
c.The daily change in the stock's closing price
d.The dividend yield of the security
Explanation
The spread is the gap between the highest bid (best buying price) and the lowest ask/offer (best selling price). A narrow spread generally signals a liquid, actively traded security, while a wide spread suggests lower liquidity.
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