Business, Legal & Accounting Glossary
Firms wishing to take on the responsibilities of market-making are obliged to quote their prices to broker/dealers who then decide whether or not to respond to them. These quotes are two-way prices, the lower of which is known as the bid price (the price at which the holder can sell shares) and the higher is the offer price (the price at which the holder can buy shares).
The bid/offer spread will be determined by a number of factors- the underlying price of the equity, the sector, liquidity, volatility, takeovers, corporate actions etc.
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This glossary post was last updated: 15th February, 2020 | 4 Views.