Bid-offer price: Difference between revisions
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Bid offer prices (or bid-ask prices) are two-way prices quoted by market makers simultaneously as the prices at which they are willing to deal with customers, either to buy or to sell. | '''Bid-offer prices''' (or bid-ask prices) are two-way prices quoted by market makers simultaneously as the prices at which they are willing to deal with customers, either to buy or to sell. | ||
The difference between the [[bid price]] and the [[offer price]] is known as the [[spread]]. | The difference between the [[bid price]] and the [[offer price]] is known as the [[spread]]. | ||
The spread is of course always | The spread is of course always favorable for the market maker. | ||
The greater the spread, the greater the market maker’s compensation for their work and risk in making the two-way price. | The greater the spread, the greater the market maker’s compensation for their work and risk in making the two-way price. | ||
Correspondingly, the greater the spread, the greater the all-in transaction costs for the customer. | Correspondingly, the greater the spread, the greater the all-in transaction costs for the customer. | ||
== See also == | == See also == | ||
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* [[Mid market price]] | * [[Mid market price]] | ||
* [[Two-way price]] | * [[Two-way price]] | ||
== Other websites == | |||
[[Category:Financial_management]] | [[Category:Financial_management]] | ||
[[Category:Corporate_finance]] | [[Category:Corporate_finance]] | ||
Revision as of 18:53, 25 December 2019
Bid-offer prices (or bid-ask prices) are two-way prices quoted by market makers simultaneously as the prices at which they are willing to deal with customers, either to buy or to sell.
The difference between the bid price and the offer price is known as the spread.
The spread is of course always favorable for the market maker.
The greater the spread, the greater the market maker’s compensation for their work and risk in making the two-way price.
Correspondingly, the greater the spread, the greater the all-in transaction costs for the customer.
