Bid Price

  

The bid price is half the equation that goes into deciding the price of a stock (or any other tradable item). The other side is bid size (See: Bid Size).

The bid price consists of the amount someone is willing to pay for a particular stock. On the other side of the transaction is a series of "asks," the amount other people are looking to get for the stocks they are selling.

These separate prices are reconciled by market makers. They get the bids and asks together to reach an acceptable price. (See: Bid and Asked).

Related or Semi-related Video

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

00:31

percentage all tact on to the safest investment in the

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world Things from the us treasury like t bills and

00:39

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

01:00

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

01:09

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

01:27

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

01:44

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

01:58

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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to recap this is play bond magazine and this is

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play But magazine reads it for the articles Really weird

Up Next

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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