The difference between the buy at and the sell at price is caused by:
A) market friction.
B) transaction cost.
C) menu cost.
D) market friction and transaction cost.

Question

Quizplus · Accepted Answer

The difference between the buy and sell price, often referred to as the bid-ask spread, is influenced by both market friction and transaction costs. Market friction refers to the various barriers to trading, such as the time it takes to find a buyer or seller, which can affect the liquidity and pricing of assets. Transaction costs include fees and commissions paid to brokers and exchanges, which can widen the spread between the buying and selling price.

The Difference Between the Buy at and the Sell at Price