Bid-ask spread

Bid-ask spread — the gap between the price dealers pay you (bid) and the price they charge you (ask). It’s the invisible transaction cost on every trade, and it widens exactly where liquidity thins: small lots, odd bond issues, quiet stocks. On the PDEx secondary market it’s the friction that makes buy-and-hold-to-maturity the default plan — a bond held to maturity never pays the spread twice. Lesson 1.8’s rule applies: illiquidity must be paid for, and the spread is where you pay it.

First used in: 2.3 · Bonds and the peso ladder