单选题

What type of risk does the bid-ask spread most closely measure?

【正确答案】 C
【答案解析】

C is correct because the size of the spread between the bid price and the ask price is the primary measure of liquidity of the issue. Liquidity risk is the risk that the investor will have to sell a bond below its indicated value. The wider the bid-ask spread, the greater the liquidity risk.