A dealer quotes a bid price of $130 and an ask price of $131 for every share of Apple stock.

A dealer quotes a bid price of $130 and an ask price of $131 for every share of Apple stock. If you sell an Apple share to this dealer, at what price will you sell?

$140.2 $131 $140.1 $130

Solutions

Expert Solution

Bid Price : It is the price at which investor (dealer in this case ) is willing to buy the security.

Ask Price : It is thr price at which investor (dealer in this case ) is willing to sell the security.

In this question dealer qoutes a bid price of $130 and an ask price of $ 131 for every share of Apple stock. It means that dealer is willing to buy at $130 and willing to sell the share at $ 131.

If we sell apple share to this dealer then this dealer will not pay more than $ 130. Therefore the sale price of apple share will be $ 130.

Therefore last option i.e. $130 is correct.

jeff jeffy answered 2 years ago

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