SIE Exam Question 248: Answer and Explanation

Question: 248

The spread between bid and offer

• A. is entirely up to the firm which is making a market in the stock
• B. gets wider as the volume increases
• C. gets narrower as the volume increases
• D. is generally fixed for the trading day

Correct Answer: C

Explanation:

C: The more actively traded a stock (high volume), the narrower the spread between the bid and ask prices.