
Explanation:
The bid-ask spread is not limited. It is a dynamic variable that can fluctuate based on a variety of market factors. The bid-ask spread is essentially the difference between the highest price a buyer is willing to pay for an asset (the bid) and the lowest price a seller is willing to sell that asset for (the ask). This spread can vary widely depending on the liquidity of the asset, the volatility of the market, and the overall economic conditions. For instance, in a highly liquid market with many buyers and sellers, the bid-ask spread may be quite narrow. Conversely, in a less liquid market or during times of high market volatility, the bid-ask spread may widen
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Q.2258 Which of the following statements is correct regarding the bid-ask spread of a financial instrument?
A
The bid-ask spread is limited to 1%.
B
The bid-ask spread is limited to 0.5%.
C
The bid-ask spread ranges between 0.5% and 1%, depending on the type of security being traded.
D
The bid-ask spread is not limited.
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