SIE Exam Practice Question 658

Question: 658

Which of the following describes the relationship between a security's bid-ask spread and its liquidity?

A. In general, the smaller a security's bid-ask spread, the better its liquidity.

B. In general, the larger a security's bid-ask spread, the better its liquidity.

C. The bid-ask spread effects a security's marketability, but not its liquidity.

D. There is no relationship between a security's bid-ask spread and its liquidity.