In the trading of a security, the dealer's spread refers to _____.

Question

Quizplus · Accepted Answer

The dealer's spread is the difference between the bid and asked prices of a security, which represents the dealer's markup or profit from a security transaction. A is incorrect because it includes both bid and asked prices in the calculation of the dealer's revenue, and does not account for the difference between the two. B is incorrect because it suggests that the dealer's markup is the total sum of the bid and asked prices, which is not the case. D is incorrect because it suggests that the dealer's expenses are represented by the spread, which is not the case. E is incorrect because it suggests that the dealer's markup is the ratio between the bid and asked prices, which is also not the case.

In the Trading of a Security, the Dealer's Spread Refers