Bid-offer price: Difference between revisions
From ACT Wiki
Jump to navigationJump to search
imported>Doug Williamson (Add link.) |
imported>Doug Williamson (l) |
||
| (8 intermediate revisions by 2 users not shown) | |||
| Line 1: | Line 1: | ||
Bid offer prices (or bid-ask prices) are quoted by market makers simultaneously as the prices at which they | '''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 favourable 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. | |||
| Line 10: | Line 17: | ||
* [[Market maker]] | * [[Market maker]] | ||
* [[Mid market price]] | * [[Mid market price]] | ||
* [[Two way price]] | * [[Two-way price]] | ||
[[Category:Financial_management]] | |||
[[Category:Corporate_finance]] | |||
Latest revision as of 15:16, 29 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 favourable 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.
