A narrow bid-asked spread indicates that a security has
A) small price fluctuations.
B) high liquidity costs.
C) low transaction volume.
D) a thin market.

Question

Quizplus · Accepted Answer

A narrow bid-asked spread means that there is a small difference between the highest price that a buyer is willing to pay (bid) and the lowest price that a seller is willing to accept (ask), which indicates that there is a high level of liquidity and trading activity. This is usually associated with securities that have stable prices and high trading volumes.

A Narrow Bid-Asked Spread Indicates That a Security Has