Which of the following statements is FALSE? A. Bid prices exceed ask prices. B.

Question

Which of the following statements is FALSE?

A.

Bid prices exceed ask prices.

B.

On the floor of the NYSE, prior to 2005 market makers (known on the NYSE as specialists) matched buyers and sellers.

C.

On Nasdaq, stocks can and do have multiple market makers who compete with each other. Each market maker must post bid and ask prices in the Nasdaq network where they can be viewed by all participants.

D.

Because customers always buy at the ask and sell at the bid, the

bidminusask

spread is a transaction cost investors have to pay in order to trade.

Explanation / Answer

A. Bid Prices Exceed Ask Prices-False

Correct Ans is : Ask Prices Exceed Bid Prices.

Since Ask price is what sellers are willing to take for it.The Difference is called the bid-ask spread.Because Customers always buy at the ask (the higher price) and sell at the bid (the lower price)the bid ask spread is a transaction cost investors have to pay in order to trade.

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