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

A.

In the financial cycle, money flows from savers and investors to companies who use that money to fund growth through new products.

B.

In the financial cycle, money flows from companies to savers and investors who use that money to fund growth through new products. The profits and wages generated by the investors and savers then flows back to the corporation.

C.

Financial institutions connect the money with ideas and assist in returning the profits back to the investors.

D.

In the financial cycle, companies generate profits and wages and interest which then flow back to the savers and investors.