Series 7 Exam Question 121: Answer and Explanation

Question: 121

The inside market is the

• A. lowest bid price and lowest ask price
• B. lowest bid price and highest ask price
• C. highest bid price and lowest ask price
• D. highest bid price and highest ask price

Correct Answer: C

Explanation:

C. The inside market of a security is the highest bid price (the most an entity is willing to pay for a security) and the lowest ask (offer) price, which is the least an entity will accept for selling the security. So when investors purchase a security, they would be buying at the lowest ask price or selling at the highest bid price.