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Finance Glossary

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Bid-Ask Spread


This is a quote consisting of two prices that dealers give to potential customers. The Bid" is the price at which the dealer will buy the security. The "Ask" is the price at which the dealer will sell the security. The bid price will be lower than the ask price; the difference between the two prices represents the dealer's profit for the transaction. An example would be "20.00 - 20.50." The dealer is saying that he will buy at $20 and sell at $20.50.