Which of the following is a measure of the difference between the buying and selling price of a security?

The measure that indicates the difference between the buying and selling price of a security is referred to as the spread. The spread reflects the liquidity and transaction costs associated with a security. A wider spread often signifies greater risk or lower liquidity, as it may indicate that you will pay more to buy a security than you will receive when selling it. In trading, the spread helps investors assess the market quality for a security, with narrower spreads typically indicating a more liquid market where buyers and sellers can transact with less cost. This concept is crucial for traders and investors, as understanding the spread can help inform decisions about entering or exiting positions.

The other options, while relevant to investing, do not pertain to the difference between buying and selling prices. Yield refers to the income generated by an investment relative to its cost, the price-to-earnings ratio is a valuation ratio measuring a company’s current share price relative to its per-share earnings, and dividend yield indicates how much a company returns to its shareholders in dividends relative to its stock price. Each of these metrics serves a distinct purpose in the investment analysis process but does not directly relate to the concept of the spread.