THE BEECHMONT CREST ONLINE GUIDE TO STOCKS AND INVESTING
WHAT IS A STOCK QUOTE?
A stock quote has two basic components: a bid price and an ask price.
-The bid price is the price at which a buyer is willing to buy the stock. From the perspective of a stockholder, this is the price at which the stock can be sold.
-The ask price is the price at which a seller is willing to sell the stock. If you want the stock, this is the stock’s purchase price.
In the case of the listed exchanges, only one quote exists. This quote consists of the highest bid and the lowest offer--the best deal available for both buyers and sellers. A person called a specialist receives bid and ask prices from all market participants. The specialist then displays the best numbers available.
In an over-the-counter (OTC) market, things are more complicated. There is no one person who designates the best ask price and bid price. In the retail, OTC market for stocks, brokers have to find the best deal available for their clients. This may be difficult when trading volume is high-- and ask and bid prices are fluctuating rapidly.