Question: Explain why the bid-ask spread is a transaction cost.

Explain why the bid-ask spread is a transaction cost.

Step by Step Solution

★★★★★

3.52 Rating (182 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Investors always buy at the ask and sell at the b... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

82-B-C-F-G-F (71).docx

120 KBs Word File

Students Have Also Explored These Related Corporate Finance Questions!

Q:

Why is there a difference between bid and ask prices at some point in time for a specific security?

Q:

Explain the difference between a bid and an ask price.

Q:

The bid and ask yields for a Treasury bill were quoted by a dealer as 5.91% and 5.89%, respectively. Shouldnt the bid yield be less than the ask yield, because the bid yield indicates how much the...

Q:

Explain why the bid-ask spread is a transaction cost. Investors always buy at the ask bid and sell at the bid ask . Since bid ask prices always exceed ask bid prices, investors " lose gain " this...

Q:

Explain why the bid-ask spread is a transaction cost. (Select from the drop-down menus.) Investors always buy at the and sell at the prices always exceed prices, investors " this difference. It is...

Q:

Explain why the bid-ask spread is a transaction cost.

Q:

16. Explain why the bid-ask spread is a transaction cost.

Q:

Explain why the bidask spread is a transaction cost.

Q:

1. What is/are the difference between a public and private corporation? 2. What is/are the difference between a primary and a secondary market? 3. Explain why the bid-ask spread is a transaction cost.

Q:

1. What is/are the difference between a public and private corporation? 2. What is/are the difference between a primary and a secondary market? 3. Explain why the bid-ask spread is a transaction cost.

Q:

You are the financial analyst for the University of South Carolina's athletic department. As part of its master facilities plan, the department's chief financial officer has asked you to analyze a...

Q:

Current and historical issues surrounding Latino culture in the United States and the challenges they face in education from pre-K through college. What differences do you notice compared to what you...

Q:

The Federal Reserve's four goah of monelary policy are A . price stablity. high employment, eoononit growth and stablity of finaroial matives and inathitions. C . Iow govenment budget defloks. low...

Q:

If x > 0, x 50 + x 25 is what percent of x ? (A) 6% (B) 25% (C) 37% (D) 60% (E) 75%

Q:

Preparing a Balance Sheet Prepare a 2007 balance sheet for Haltiwanger Corp. based on the following information: cash = $210,000; patents and copyrights $720,000; accounts payable = $430,000;...

Q:

Residual Claims Clappers Clippers, Inc., is obligated to pay its creditors $6,100 during the year. a. What is the market value of the shareholders equity if assets have a market value of $6,700? b....

Q:

Marginal versus Average Tax Rates (Corporation Growth has $82,000 in taxable income, and Corporation Income has $8.200,000 in taxable income. a. What is the tax bill for each firm? b. Suppose both...

Q:

Consider the case of Turnbull Co. Turnbull Co. has a target capital structure of 58% debt, 6% preferred stock, and 36% common equity. It has a before-tax cost of debt of 11.1%, and its cost of...

Q:

1 A researcher conducted an Internet survey of 300 students at a particular college to estimate the average amount of money students spend on groceries per week. The data are distributed normally,...

Q:

Selling stock overseas is attractive to corporations because it Select one: a. improves the company's visibility in foreign markets b. may decrease the price of the company's stock C. decreases the...