Question

When you want to liquidate 100 shares at the market price, and the current market shows a bid-ask spread of 904.78-905.57, at what price will the client's transaction occur? (Please disregard any commission or other charges for this calculation.)

Answer 1

The client's shares would be sold at the bid price of $904.78 per share when liquidating at the market price given a bid-ask spread of 904.78-905.57.

Step-by-step explanation:

When looking to liquidate 100 shares at the market price, it's important to understand the bid-ask spread. In the scenario provided, the bid price is 904.78 and the ask price is 905.57. If you are selling shares, the transaction will occur at the bid price because that is the highest price a buyer is willing to pay at that moment.

Thus, the client's shares would sell for $904.78 per share.