Bid and Asked

  

When we check in on the stock market, it can seem like there is just one price for each stock. We look up Microsoft, for instance, and see it's trading at $100.86 per share. That's the price for the stock. Just like a Big Mac costs $5, MSFT stock costs $100.86.

But the price for the stock is more complicated. The price you see at any given time is the result of complex interplay that takes place in the background. That system consists of a series of "bids" and "asks."

Bids consist of people wanting to buy the stock and listing the price they are willing to pay. You might give a bid for MSFT of 1,000 shares at $100 per share. Meanwhile, asks consist of people wanting to sell the stock, and giving the price they want to get. So someone might offer 1,500 shares of MSFT for $101 per share.

All the bids and asks (continuously updated and fluidly appearing, disappearing, and changing) get consolidated into the list price shown when you google the stock price.

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Finance: What is Spread To Treasuries?3 Views

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Finance allah shmoop what is spread to treasuries All right

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all right close that play bond magazine there people The

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answers are all right here Spread to treasuries is not

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a type of you know art photo but rather it's

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an indication of risk associated with a given debt or

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bond offering In the investing world Everything is calculated as

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some additional premium or additional cost or additional capital rental

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percentage all tact on to the safest investment in the

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world Things from the us treasury like t bills and

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bonds stuff like that from treasury We'll think about it

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like you're going to a restaurant looking at the dinner

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salad there for three bucks It's the cheapest thing on

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the menu if you wanted a steak Well that state

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costs fif eighteen dollars but it's a spread or premium

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to the dinner salad of twelve bucks right Three bucks

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for the south and you'd have to add twelve from

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state prize You get stick And if you really wanted

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to just use smaller numbers so that your customers would

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have the illusion that they were paying fewer box for

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dinner well you could describe everything in your restaurant as

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some spread to dinner salad such that this medium rare

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rib eye was in fact simply a spread to salad

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or premium of twelve bucks Even though you're paying fifteen

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anyway Us treasuries air broadly considered to be the safest

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bond bet in the world at least today until china

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or robots or both take everything over So when a

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bond offering is made it is priced relative to treasuries

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in the same way dinner items would be priced relative

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to that dinner salad house salad there with the oil

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and vinegar dressing that is if the bond offering is

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for say ten years than the u s treasury ten

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year paper that moment would be the foundational elements against

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which their risk your debt instruments would then be priced

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So let's say that today that ten year treasury paper

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is yielding three point two percent Caterpillar tractor wants to

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borrow a billion dollars to build their new tractor smelting

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plant there then offered by investors one hundred twenty basis

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point spread to treasuries debt deal to a fund that

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factory with a billion dollars of debt What does that

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mean It means that lenders are willing tto loan caterpillar

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A billion dollars payable in ten years at three point

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two percent per year plus one point two percent for

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total interest of four point four percent interest per year

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You know take it or leave it That's it So

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Finance: What is Spread?
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What is spread (bid-ask)? The bid-ask spread compares how much a buyer will pay to how much the seller will sell for. The asking price is what the...

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