The prices for stocks (and other items that trade on markets) get decided by an auction system.
On the surface, it may seem like a stock has a single price. You log into your brokerage account or you google a stock price. You're shown that one price...the market price. Basically, this figure represents the most recent price the stock sold for. It looks similar to an item selling on Amazon, just the product with a price. Either pay that price or don’t buy it.
But, behind the scenes, there exists a more dynamic system comprised of bids and asks.
A bid represents someone declaring to the market, "Hey, I'd buy this many shares at this price." An ask consists of someone making a similar declaration about how many shares they'd be willing to sell for a particular price. Bids get matched with asks...that process sets the market price.
The term "Market Versus Quote" describes the difference between the most recent market price (that's the "market" part) and the current bid and ask prices (the "quote," in Wall Street lingo).
It works like this: you've got DIS trading at $130 a share (the market price). Meanwhile, the last bid came in at $129.75 and the most recent ask called for a price of $130.25. Those figures compute to an MVQ of $0.25. The market price for DIS is $0.25 off the most recent bid/ask for those shares.
Related or Semi-related Video
Finance: What is a Firm Deal: Commit, Qu...4 Views
Finance allah shmoop What are a firm deal Ah firm
commit and a firm quote No a lot of firms
here is by agra involved in this one No Well
okay people Yes You knew we were going to go
there We'll start with firm commit Well the whole notion
of a firm commit applies on a few fronts Like
if a lender is lending dough Well usually there is
a contractual agreement cleverly called a firm commitment letter and
it derives a firm deal like the deal will follow
that commitment And that letter specifies the amount of money
the lender is willing to lend at a given interest
rate With all the terms you know spelled out for
given time like this offer is good for thirty days
or until june first Or until the where wolf grows
What they crow Don't they Okay howl whatever In an
ai po when a bank is selling shares on behalf
of a company issuing them a firm commit gives rise
to a firm deal And it basically says that the
bank is responsible for selling any unsold shares That is
It's called a quote bought deal unquote And the bank
Either sells those aipo shares to investors or well they
buy them for their own account In a firm quote
the commitment involved usually refers to a broker dealers bid
ask spread in selling those shares like she holds a
few million shares of amazon in inventory and publishes to
her constituency that she is firm as a buyer at
eleven hundred two and twenty and a seller at eleven
hundred eight and fifty Got it sets one one zero
two point two zero in a cellar at one one
zero eight point five oh yeah that's how it would
look well if anyone matches those numbers then she is
legally obligated to sell them And just in case someone
wants to buy a good gillian shares i am or
than she carries in inventory well there's usually a limit
number attached to her offer for like i stand firm
on one hundred thousand at this price like a hundred
thousand shares and not a hundred thousand won something like
that anyway so firm think obligated confirmed contracted for legally
binding and sometimes yeah that'll give you cramps Just try 00:02:17.1 --> [endTime] prunes
Up Next
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...