Dealer's spread

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Dealer's spread

Dealer's Spread

The amount a dealer earns by buying a security and then selling it to an investor. The dealer's spread is the difference between the dealer's purchase price and his/her sale price. The dealer's spread is how dealers (other than broker-dealers) make most of their profits.
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In contrast to previous research, they find that inside dealer spreads narrow throughout the trading day, especially near the close.
Q: And again, is that, in your professional opinion, because those market makers had three-quarter point dealer spreads and did not want to enter what were termed "unprofessional markets"?
May 31, 1994: Within one week after the release of Christie and Schultz's results, dealer spreads on four prominent Nasdaq stocks narrowed and market makers began entering odd-eighth prices quotes in those stocks.
Furthermore, Hamilton |21~ shows that market spreads and modal dealer spreads have similar cross-sectional properties.