You Find That the Bid and Ask Prices for a Stock

question 85

Multiple Choice

You find that the bid and ask prices for a stock are $10.25 and $10.30, respectively. If you purchase or sell the stock, you must pay a flat commission of $25. If you buy 100 shares of the stock and immediately sell them, what is your total implied and actual transaction cost in dollars?

• A) $50
• B) $25
• C) $30
• D) $55

---

Definitions:

Metamorphic

Rock that has undergone transformation through heat, pressure, or chemically active fluids, altering its original composition or structure.

Sedimentary

Relating to rocks formed by the accumulation and consolidation of mineral and organic particles deposited by water, air, or ice.

Clastic

A material consisting of pieces (clasts) derived from preexisting rocks; usually formed on Earth’s surface in low-temperature environments; syn. detrital.

Clast Density

The measure of the density of the fragments or grains that make up a sedimentary rock.