Example 3: US Treasuries Bid-Ask SpreadUS treasuries bid-ask quotes are expressed in terms of multiples of 1/32s.Bid-ask quote for a $1,000 US bond that carries 6% coupon rate and matures in 15 years is 103.16 − 28. It means the dealer is willing to buy the bond for $1035 [=...
For example, imagine that a market maker MM in a stock – let’s call it Alpha – shows a bid and ask price with a quote of $10.00 - 10.05. This means that this MM is willing to both buy Alpha shares for $10 and sell it at $10.05. 我查了好几篇文章都和这句话说得类似, 就是...
Another major factor that impacts bid-ask spread is volatility. Volatility means that there is either huge market demand for any instrument or a total loss of demand. In these circumstances, the dealer wants to benefit as much as possible hence the spreads will be wider when volatility is high...
The bid/ask spread is an indication of supply and demand: A narrow bid/ask spread typically indicates a high demand, whereas a wide bid/ask spread generally means that fewer people are trading that product. Who determines the bid and ask prices? Prices are driven by all market participants....
2、你也可以从bid-ask spread experienced in downturn这个角度来思考，得到的结论也是一致的，回答得可以的。bid-ask spread也能衡量出流动性风险的大小，North在下跌的时候，spread很大，说明在下跌的情况下，市场流动性很差。Valley在下跌的时候，bid-ask spread中等到大，相较于North来说，流动性风险稍稍小点。
company called Bluth’s Bananas. You see the bid price of $10 and an ask price of $10.02. If you’d placed a buy order with your broker, you’d pay the ask price of $10.02, which means you’d pay $1,002 for 100 shares instead of the $1,000 you’d have paid at the bid ...
What is an acceptable bid/ask spread? usually20% or less. That just means if the bid is . 50, the ask shouldn't be more than . 60. Why are bid and ask price difference? In short, the bid-ask spread is always to the disadvantage of the retail investor regardless of whether they ...
The Bid-Ask Spread Bid and Ask Price Example Lesson Summary Frequently Asked Questions What does it mean when there is a large spread between bid and ask? When there is a large spread between the bid and ask price, it usually means there is a very low volume of transactions happening betw...
Wide spreads are the bane of the retailcurrency exchangemarket. A larger bid-ask spread means a dealer can make a larger profit but customers are offered a less favorable exchange rate. A lower bid-ask spread is more favorable to customers but less favorable to dealers. Customers can get a ...
This explains why a higher bid-ask spread means there's lower liquidity or ease of trading a stock. The greater the spread, the less likely it'll be that buyers and sellers will settle on a price they both find agreeable. Market makers provide some alternatives in this situation, simultaneo...