The bid-ask spread in a dealer market represents the profit that a dealer would make on a transaction involving a security. Which of the following statements best describes the bid-ask spread?
A) The sum of the price at which a dealer is willing to buy a security and the price at which a dealer is willing to sell it.
B) The difference between the closing price of the security and the opening price of the security on the day of the transaction
C) The difference between the price at which a dealer is willing to buy a security and the price at which a dealer is willing to sell it

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andromache andromache · Answer 1 · 2020-09-05T02:48:04+02:00

Answer:

C) The difference between the price at which a dealer is willing to buy a security and the price at which a dealer is willing to sell it

Explanation:

The bid price refers to a price that should be high for an investor to pay for per share

While on the other hand, the ask price refers to a price that should be low i.e. the seller accept at that price

And, the difference between the two is known as the spread

So here the bid ask spread satisfied the C option as it is fits to the given situation

Hence, the correct option is C.