bid-ask spread

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Bid-Ask Spread

On an exchange, the difference between the highest price a buyer of a security or other asset is willing to pay and the lowest price a seller is willing to offer. Generally speaking, the more liquid an asset is, the lower the bid-ask spread is. As a result, currency, which is considered the most liquid asset, has an extremely low bid-ask spread.

bid-ask spread

See spread.
References in periodicals archive ?
WorldWideMarkets' historical focus on fixed spreads, where the bid ask spread is the same at all times, even during extremely volatile markets, is rooted in the preferences of professional traders.
examines the influence of Earnings management on Bid ask spread and concludes that the liquidity providers react to the aggressive accounting practices of earnings management and tend to widen their bid-ask spreads to protect themselves.
Testing their sample they concluded that better earnings management overcome this effect and by having a greater bid ask spread and ultimately suffers lower stock liquidity.
The BID ASK SPREAD is calculated as (closing ask- closing bid) divided by closing midpoint.
Several papers have developed theoretical models that make predictions about the effect insider trading has on the bid ask spread.
t] is the return calculated with the inferior limit of the bid ask spread and [RD.
1992, `Empirical evidence on the impact of the bid ask spread on the characteristics of CRSP daily returns', Journal of Financial Research, vol.
Galai, 1983, "Informational Effects on the Bid Ask Spread," Journal of Finance 38, 1457-1469.
Low volume funds generally have a wider bid ask spread, a factor that can add to total costs when compared to their more liquid peers.
NEO Markets has created a new marketplace experience offering unprecedented trading speeds, enhanced operational efficiency, comprehensive liquidity and tighter bid ask spreads.
If we assume that the increase in demand for the options from A1([lambda]) to A2([lambda]), for a fixed supply B([lambda]), is such that the following three assumptions are satisfied then it is possible to give the necessary and sufficient conditions under which increased transactions demand yield increased volume and narrower bid ask spreads.