The bid-ask spread is negatively related to
A)order costs
B)inventory costs
C)risk
D)trading volume

Name: The bid-ask spread is negatively related to A)order costs B)inventory costs C)risk D)trading volume
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Question

Quizplus · Accepted Answer

The bid-ask spread is negatively related to trading volume because higher trading volumes typically lead to more liquidity, reducing the market maker's risk and inventory costs, thereby allowing for a narrower spread.

The Bid-Ask Spread Is Negatively Related to