Answer:
$12
Explanation:
Consider the situation of a security, for which the prices quoted are as follows: bid price is $100, and the ask price is $100.12. Now, one should know that the price of a stock is not just one figure. In fact there are two prices always associated with every stock – the bid price, which is the price at which the stock can be sold in the stock market; and the ask price (also called the offer price), the price at which the stock can be bought from the market. The market-maker would always be interested in the bid-ask spread for the stock at any point in time, which is the difference between the two prices.
Comment
Step 2 of 4
So by looking at the situation of the security at hand, the price at which the market-maker would purchase the security would be:
the bid price, which is.
Comments (3)
Step 3 of 4
And by looking at the situation of the security, the price at which a market-maker would sell the security would be:
the ask price, which is .
Comment
Step 4 of 4
The market makers Bid - Ask spread, or the quantified difference between the two (the bid amount and the ask amount) for 100 shares of the secutiry would be:
= Selling price – Buying Price
(100.12-100)x100
=$12
