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 ?
NEO Markets has created a new marketplace experience offering unprecedented trading speeds, enhanced operational efficiency, comprehensive liquidity and tighter bid ask spreads.
We find marked decreases over all the tests employed for the dividend yield (a proxy for cost of capital), bid ask spreads and volatility.
The mean bid ask spreads declined from an average of 3.
Declerck (2002) listed 5 millions transactions and the same number of bid ask spreads for the period between January and June 1998 for the CAC 40 stocks.
t] is the return calculated with the inferior limit of the bid ask spread and [RD.
1996, `The determinants of market bid ask spreads on the Australian Stock Exchange: Cross-sectional analysis', Accounting and Finance, vol.
1995, `Market structure and the intraday pattern of bid ask spreads for NASDAQ securities', Journal of Business, vol.
The more shares that trade in a particular security, the easier it will be to move in and out of it, keeping bid ask spreads tight for popular stocks (see the Three Biggest Mistakes of ETF Investing).
With that being said, investors should note that low volume ETFs still face some issues that their high volume counterparts do not, namely in the form of 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.
This finding is not reported in the other studies mainly because during the last few minutes before the close of the exchange, bid ask spreads do not reflect market conditions.