Bid-Ask Spread

What is a Bid-Ask Spread?

A Bid-Ask Spread is the difference between the lowest price that someone is willing to sell you shares of an asset (ask price) and the highest price that someone is willing to buy from you (bid price). The larger the spread, the more inefficient the asset.

For example, when you sell shares of a stock, you will receive the lower bid price. When you buy shares of a stock, you will have to pay the higher ask price.