Hello dear professor @awesononso.

I've been looking forward to season four. I've decided to prepare the first assignment of the season for you.

I'm very interested in the assignment. Thanks to you, I've learned a lot about this.
I hope I prepared my post in a way that you'd like.

The Bid-Ask Spread Homework

1-Properly explain the Bid-Ask Spread.

Bid-Ask Spread is the difference between the purchase and sale price of a traded commercial commodity.

The highest value that the buyer will pay for commercial property is called "pid price".

The lowest price that the seller will accept to sell a commercial property is called "ask price".

The difference between the purchase offer price and the sales price is
spread.

The higher the liquidity of a commodity, the less its spread.

So if a commodity can be converted into cash without losing much of its value, it means it's liquid.

If the spread is small, we understand that the goods are easy to buy and sell.

2-Why is the Bid-Ask Spread important in a market?

The spread of a commodity traded in the market gives information about the trading volume and liquidity of that commodity.
If the spread of the goods is low, we will know that there are enough buyers and sellers for this goods.

I'd like to give you an example.

[Screenshot from Binance]

As you can see here, the spread for steem coin is quite small.
We understand that steem coin liquidity is high. So it's easy to cash in.

If the spread was wide, we would know that this co., of the year, is low in trading. We were also going to say it's not liquid and it's not going to be easy to cash in.

Fortunately, Steem coin is a coin with high liquidity.

It is very important for both the buyer and the seller to know the spread of a product on the market.

It provides information about the liquidity of the product.

Sample calculation 1

1. If Crypto X has a bid price of $5 and an ask price of $5.20,
   
   
   a-Calculate the Bid-Ask spread.
   b-Calculate the Bid-Ask spread in percentage.

a- Bid-Ask Spread = Ask price - Bid price
= $5.20 - $5
= $0.20

b- %Spread = (Spread/Ask Price) x 100
= ($0.2/$5.20) x 100
= 3.85

Sample calculation 1

1. If Crypto Y has a bid price of $8.40 and an ask price of $8.80,

a-Calculate the Bid-Ask spread.
b- Calculate the Bid-Ask spread in percentage.

a- Bid-Ask Spread = Ask price - Bid price
= $8.8 - $8.4
= $0.4

b- %Spread = (Spread/Ask Price) x 100
= ($0.4/$8,80) x 100
= 4.54

In one statement, which of the assets above has the higher liquidity and why?

Cripto x is highly liquid from these two assets.
Because bid-ask spread is lower.

Cripto X = 0,2 Bid- Ask Spread
Cripto Y = 0,4 Bid -Ask Spread

Explain Slippage

The change in the price of the sales price during the trading period during the purchase is called a shift.

Let's explain with the example:
The sale price of an A cryptocurrency is $1. We're going to take this.
The purchase process may take a few seconds. During that time, cryptocurrency A could be worth $0.99 or $1.01.

This is called slippage.

There are two types of slippage.
1- Positive Shift

It is a positive shift to get cryptocurrency A from 0.98 when trading to get it from $1.

Another positive layma is;

Selling Crypto A for 1.02 $dan while trading cryptocurrency A for $1 is a positive shift.

2- Negative Shift

When we are going to get an A cryptocurrency at $1, the change in the transaction is a negative shift in the $dan 1.02.

Selling an A cryptocurrency at $1, while selling it at $0.98 with a price change during trading, is a negative shift.

Thank you to professor @awesononso who helped me prepare the assignment with a sample post.