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Definition: Spread

Bid price of a security or an asset is the maximum price at which there is a buyer to buy the asset. Ask price of a security or an asset is the minimum price at which there is a seller who is ready to sell the asset. The difference between ask and bid price is known as Spread.

The narrower the spread the greater is the liquidity of the asset or security.

Example: The Bid price of asset A is 55. The Ask Price of asset A is 50. Then the spread of Asset A is 5.

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