Spread

Spread

The "spread" is the difference between the "bid" price and the "ask" price on over-the-counter market securities. The term "bid" refers to the highest price a market maker will pay at any given time to purchase a specified number of shares of a stock. The term "ask" refers to the lowest price at which a market maker will sell the stock.

The ask price (also known as the "offer" price) will almost always be higher than the bid price. Market makers make their money on the spread.

 

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