The bid-ask spread is computed using the following formula:
A)(Ask price - Bid price)/Bid price.
B)(Bid price - Ask price)/Bid price.
C)(Bid price - Ask price)/Ask price.
D)(Ask price - Bid price)/Ask price.

Question

Quizplus · Accepted Answer

The bid-ask spread is the difference between the bid price and the ask price of a security. It is usually expressed as a percentage of the ask or bid price. To calculate the bid-ask spread as a percentage of the ask price, you subtract the bid price from the ask price and then divide that result by the ask price. Therefore, the correct formula is (Ask price - Bid price)/Ask price.

The Bid-Ask Spread Is Computed Using the Following Formula