Stock XYZ is traded in an order-driven market. The state of the limit order book is as follows:

Buy Volume	Price	Sell Volume
4,500 1,000 10,000 9,000 3,000	10.09 10.07 10.06 10.05 10.04 10.02 10.01 10.00	4,000

Calculate the quoted bid-ask spread and the relative quoted bid-ask spread. Report both of your results to four decimal places.

Describe the main weaknesses of using the quoted spread for estimating transaction costs.

Consider the information at Question 6. Now, assume that an investor sells 100 shares for $10.07 per share. Calculate the investor's effective spread. Report your answer to four decimal places.