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Quote width in price units

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A market maker quotes a bid-ask spread equal to $12$ basis points of a mid price of $250$ . How wide is the spread in price units? One basis point is $0.01%$ .

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Hint

Take a percentage of the price.

Solution

$12$ basis points is $0.12%$ .
$1%$ of $250$ is $2.5$ , so $0.1%$ is $0.25$ .
$0.12%$ of $250$ is $0.12 \times 2.5 = 0.3$ .
The spread is $0.3$ price units wide.

Answer: $0.3$

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