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

Question

Quizplus · Accepted Answer

The bid-ask spread is the difference between the highest price a buyer is willing to pay (bid) for a security and the lowest price a seller is willing to accept (ask). Trading volume refers to the total number of shares or contracts traded in a particular market or period. A high trading volume indicates that there are many buyers and sellers for a particular security, which reduces the bid-ask spread. Therefore, the bid-ask spread is negatively related to trading volume.

The Bid-Ask Spread Is Negatively Related to