bid price

(noun)

the amount offered by a buyer

Related Terms

Examples of bid price in the following topics:

  • Market Maker

    • All those who want to buy say the maximum price they're willing to pay for a certain number of shares (the bid).
    • The difference between the highest bid and the lowest ask price is called the bid-ask spread .
    • If the one person's bid equals another's ask price, they have found a price at which they're both willing to do business, and the transaction occurs.
    • Market makers are a company or individual that quotes both an ask price and a bid.
    • The highest price someone is willing to pay (bid) for gold is $742.30 and the lowest someone is willing to accept (ask) is $743.30.

  • Defining Spread

    • The bid–offer spread for securities is the difference between the prices quoted for an immediate sale (offer) and an immediate purchase (bid).
    • A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.
    • A limit order can only be filled if the stock's market price reaches the limit price.
    • If the current bid price for the EUR/USD currency pair is 1.5760 and the current offer price is 1.5763, this means that currently you can sell the EUR/USD at 1.5760 and buy at 1.5763.
    • Under competitive conditions, the bid-offer spread measures the cost of making transactions without delay.

  • Price Transparency

    • Since bonds are traded in a decentralized, over-the-counter market dominated by dealers, there can be a lack of price transparency.
    • The two types of price transparency have different implications for differential pricing.
    • The dealer is then subject to risks of price fluctuation.
    • Rather, the dealers earn revenue by means of the spread, or difference, between the price at which the dealer buys a bond from one investor–the "bid" price–and the price at which he or she sells the same bond to another investor—the "ask" or "offer" price.
    • The bid/offer spread represents the total transaction cost associated with transferring a bond from one investor to another.

  • NASDAQ

    • The NASDAQ helped lower the spread (the difference between the bid price and the ask price of the stock), but paradoxically was unpopular among brokerages because they made much of their money on the spread.
    • It is computed from the prices of selected stocks, which vary depending on the index.

  • Signaling

    • Investors can use this knowledge about managers' behavior to inform their decision to buy or sell the firm's stock, bidding the price up in the case of a positive dividend surprise, or selling it down when dividends do not meet expectations.
    • A company's dividend decision may signal what management believes is the future prospects of the firm and its stock price.
    • Many earlier studies had shown that stock prices tend to increase when an increase in dividends is announced and tend to decrease when a decrease or omission is announced.

  • The Nature of Dividends

    • Studies have shown that stock prices tend to increase when an increase in dividends is announced and tend to decrease when a decrease or omission is announced.
    • Investors can use this knowledge about managers' behavior to determine their decision to buy or sell the firm's stock, bidding the price up in the case of a positive dividend surprise or selling it down when dividends do not meet expectations.

  • NYSE

    • Buyers and sellers meet at a physical location (in this case, Wall Street) and announce their bid or ask prices.
    • The auction market format aims to bring together the parties with mutually agreeing prices in an efficient manner.
    • They must also disclose certain information to the exchange, providing a measure of transparency that prevents insider manipulation of the stock prices.

  • Valuing the Target and Setting the Price

    • To prepare an appropriate bid for a target company, the buyer has to accurately value the target company through the due diligence process.
    • In order to prepare an appropriate bid in the mergers and acquisition process, the buyer must be able to accurately value the target company.
    • Synergies are different from the "sales price" valuation of the firm, as they will accrue to the buyer.

  • Types of Market Organizations

    • In the auction market format, buyers and sellers are brought together directly, announcing the prices at which they are willing to buy or sell securities.
    • Dealer markets, also called quote-driven markets, centers on market-makers (or dealers) who provide the service of continuously bidding for securities that investors want to sell and offering securities that investors want to buy.
    • This person or company quotes both a buy and a sell price in a financial instrument or commodity held in inventory.
    • Dealers earn a profit on the bid-offer spread.
    • The market maker sells to and buys from its clients and is compensated by means of price differentials for the service of providing liquidity, reducing transaction costs and facilitating trade.

  • Reasons to Study Finance

    • There is a lot of talk of issuing bonds or pricing projects which belies how relevant finance is to everyday life, regardless of whether or not you have any desire of working in finance.
    • Finance helps explain what trends in silver bids mean, but more importantly, why people care about them (even those not trading silver).