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Given the following listing for a Treasury note, calculate the bid-ask spread. Coupon Maturity Mo / Yr May 2025 Asked 108.108
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Answer #1

Bid-ask spread is the difference between the bid price and the ask price and is an indication of how liquid the market is for a particular security. Lower the spread, higher is the liquidity and vice versa.

Bid price is the price at which you can sell a security in the market. Ask price is the price at which you can buy the security. As in any marketplace, these prices are determined by demand-supply scenario. The ask price is always higher than the bid price.

In this case, the bid price is 107.9601 and the ask price is 108.1081.

Hence, the bid-ask spread is ask price - bid price = 108.1081 - 107.9601 = 0.148.

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