SIE (Securities Industry Essentials) Practice Exam

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What is the bid-ask spread for ABC equity security based on the current NBBO of $50.09 - $50.12?

$.03
$.02
$.04
$.01

The correct answer is: $.03

The bid-ask spread is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask) for a security. In this scenario, the bid-ask spread is calculated by subtracting the bid price ($50.09) from the ask price ($50.12), resulting in a spread of $.03. The other options may seem close, but they do not accurately reflect the given NBBO. Option B is incorrect as it only considers the difference between the bid and ask price, not the actual spread. Option C is too high as it adds the spread to the higher bid price. Option D is too low as it subtracts the spread from the lower ask price.