Business, Legal & Accounting Glossary
The ask price is the lowest price at which an investor is willing to sell an asset (e.g. stocks, commodity, etc.) on an exchange or in the over the counter (OTC) market at a given time and for a given volume of such asset.
In a stock quote, the ask price is the price at which the seller is willing to part with his or her shares. The listed ask price on an exchange is the lowest price at which any seller is willing to part with his shares.
When the bid price is equal to the ask price a transaction occurs.
Anytime someone wants to sell a stock they own they can place a price on that stock and put it on the market through a limit order. The price they set is their asking price for the stock. A market for purchasing a stock is created by many people listing the price at which they are willing to sell their stock. If someone places a market order to buy a stock they begin buying shares at the lowest asking price. When all the shares at that price are bought they begin buying shares at the next highest asking price. This is how the price of shares goes up as people buy.
For example, XYZ Corp. may be quoted on the NYSE at a $50.25 ask price for 100 shares (i.e. $50.25×100). The ask price is almost always higher than the bid price (i.e. the highest price at which an investor is willing to buy the asset). The ask price is often paired with the bid price to form the bid-ask spread (i.e. ask price minus bid price). With commodities, the ask price sometimes steps up as volume increases. In the context of mutual funds, the ask price is the net asset value per share of the fund plus any applicable sales charges. The ask price is also called the asked or asking price, the offer or offering price, or simply referred to as the ask.
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This glossary post was last updated: 4th August, 2021 | 1 Views.