Stella places a market order with her broker to buy 1000 shares of Telstra Corp. The broker buys 1000 shares at $15.40 each, and sells them to Stella at $15.55 each. He also charges a commission of $12.00. What is the bid-ask spread in this case?

Question

Quizplus · Accepted Answer

The bid-ask spread is the difference between the price the broker sells the shares to Stella ($15.55) and the price the broker buys the shares ($15.40), which is $0.15 per share. For 1000 shares, the total spread is $0.15 * 1000 = $150.

Stella Places a Market Order with Her Broker to Buy