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Finance Glossary

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Bid-Ask Spread

Definition:

The bid-ask spread is a quote security dealers give to potential customers when referring to a specific security.

The quote has two prices or numbers: the price at which the dealer will buy a specific security (the "bid") and the price at which the dealer will sell (the "ask"). The ask price will be higher; the difference between the two prices represents the dealer's profit for the transaction.

Example

A dealer gives a potential client a bid-ask spread of "20.00–20.50." The dealer is saying that he will buy at $20 and sell at $20.50.