Why is the bid-ask spread a transaction cost?

A. Common Shares pg.51

1. The Stock Market and IPOS pg.51

2. Legal Aspects of Share Ownership pg.53

3. A Note on the P/E Ratio and "Multiples" pg.55

B. Preferred Shares pg.56

1. Structural Issues (The Terms of the Deal) pg.57

Certificate of Designation of Terms of 6.75% Non-Cumulative Preferred Stock, Series Q pg.57

2. Fiduciary Duties to Preferred Shareholders pg.60

Marilyn Jedwab, Plaintiff, v. Mgm Grand Hotels, Inc., Tracinda Corporation, Kirk Kerkorian, James D. Aljian, Alvin Benedict, Fred Benninger, Barrie K. Brunet, Cary Grant, Peter M. Kennedy, Frank E. Rosenfelt, Bernard J. Rothkopf, Walter M. Sharp, Robert Van Buren, Bally Manufacturing Corporation, and Bally Manufacturing Corporation International, Defendants pg.61