What Do the Bid and Ask Prices Represent in a Stock Quote?
The bid represents the highest price someone is willing to pay for a share. The ask is the lowest price where someone is willing to sell a share. Bid and ask prices should result from the supply and demand for a stock. The difference between bid and ask is called the spread. A stock’s quoted price is the most recent sale price.
Key Takeaways
- In the stock market, the bid price represents the highest price a buyer will pay for a stock.
- The ask price is the lowest price that a seller will accept.
- The difference between the bid and ask prices is called the spread. The higher the spread, the lower the liquidity.
- Trades occur when someone is willing to sell the security at the bid price or buy it at the ask price.
- Large firms called market…
