Bid-Ask Spread


Bid-Ask Spread
The amount by which the ask price exceeds the bid. This is essentially the difference in price between the highest price that a buyer is willing to pay for an asset and the lowest price for which a seller is willing to sell it.

For example, if the bid price is $20 and the ask price is $21 then the "bid-ask spread" is $1.

The size of the spread from one asset to another will differ mainly because of the difference in liquidity of each asset. For example, currency is considered the most liquid asset in the world and the bid-ask spread in the currency market is one of the smallest (one-hundredth of a percent). On the other hand, less liquid assets such as a small-cap stock may have spreads that are equivalent to a percent or two of the asset's value.


Investment dictionary. . 2012.

Look at other dictionaries:

  • bid-ask spread — ➔ spread2 * * * bid ask spread UK }} US }} noun [C] STOCK MARKET ► BID OFFER SPREAD(Cf. ↑bid offer spread) …   Financial and business terms

  • Bid-ask-spread — Als Spread bezeichnet man in der Wirtschaft allgemein die Differenz zwischen zwei einheitsgleichen zu vergleichenden Größen. Als Indikator findet der Spread insbesondere Anwendung im Wertpapierhandel und in der Volkswirtschaftslehre.… …   Deutsch Wikipedia

  • Bid-ask spread — Als Spread bezeichnet man in der Wirtschaft allgemein die Differenz zwischen zwei einheitsgleichen zu vergleichenden Größen. Als Indikator findet der Spread insbesondere Anwendung im Wertpapierhandel und in der Volkswirtschaftslehre.… …   Deutsch Wikipedia

  • bid ask spread — See bid offer spread. Dresdner Kleinwort Wasserstein financial glossary …   Financial and business terms

  • bid/ask spread — The price difference between the bid and offer price. Chicago Mercantile Exchange Glossary The difference between the price at which a Market Maker is willing to buy a security ( bid), and the price at which the firm is willing to sell it ( ask) …   Financial and business terms

  • bid / ask - spread —   Rappresenta la differenza, in genere positiva, tra la quotazione Bid d acquisto, e ask, di vendita, indica altresì la differenza tra la più alta proposta d acquisto ( bid ) e la più bassa proposta di vendita ( ask ), presente sul mercato in un… …   Glossario di economia e finanza

  • bid-ask spread — /ˈbɪd ask sprɛd/ (say bid ahsk spred) noun (in the share market) the difference between the price buyers are offering (the bid price) and the price at which sellers are offering to sell (the ask price) …   Australian English dictionary

  • bid-offer spread — ➔ spread2 * * * bid offer spread UK US noun [C] (also bid ask spread) ► STOCK MARKET the difference between the price that someone will pay for shares, etc. and the price that they will sell them at: »The bid offer spread on equity options is a… …   Financial and business terms

  • Bid-offer spread — The bid/offer spread (also known as bid/ask spread) for assets (such as stock, futures contracts, options, or currency pairs) is the difference between the price available for an immediate sale (bid) and an immediate purchase (ask). The trader… …   Wikipedia

  • Bid-Ask Quote —    A two way price comprises a bid, or the price at which a dealer is willing to buy, and an ask (or offer) at which a dealer is willing to sell. The bid, by definition, is always below the ask and is always the first quoted price. The difference …   Financial and business terms