Robert G. Frye - Bob
1 Answer
Chiangmai
I am giving the same answer to another questioner.
Generally the share price of a stock is determined by what the investors perceive the worth of the company is a given moment. When more people believe that a company (such as Apple Computer) is worth more than the people who think otherwise, the stock price goes up, and vice versa ( everybody hates Bank of America). When a stock price remains relatively unchanged, it has achieved equilibrium. This happens when the number of sellers roughly equal to the number of buyers.
There are two prices when you try to buy a stock: the bid price and the ask price. The bid price is the highest price someone is willing to buy a stock at the current market condition. For example, someone is willing to buy Caterpillar (CAT) @ the price of $79.90 per share. The "ask" price is the price in which a seller is willing to sell CAT at the same moment, say $80.00 per share. The difference between the 2 values is called the "Spread". This is the amount the specialist or trader makes on the floor of the exchange.
The market price, buy and sell, is the amount that the buyer or seller wants to execute at whatever the market is asking at the time.
| 12 years ago. Rating: 1 | |
