Quoted Price
The quoted price refers to the most recent price at which an asset (such as stocks, bonds, commodities, or any other type of security) was traded. It represents the most current market valuation for that asset at a specific point in time. The quoted price is made available to the public by exchanges or other market venues and is usually the basis on which subsequent trades are conducted until the next price update.
For publicly traded stocks, the quoted price reflects the amount an investor can expect to pay to buy a share or the amount one can expect to receive for selling a share at a given point in time. The difference between the price at which someone is willing to sell (the “ask” price) and the price at which someone is willing to buy (the “bid” price) is known as the “bid-ask spread.”
It’s important to note that quoted prices can change rapidly, especially in volatile markets or for assets that trade in high volumes.
Example of the Quoted Price
Let’s consider the scenario of someone looking to buy shares of a hypothetical company, ABC Corp, on a stock exchange.
Example: ABC Corp’s Quoted Price on the Stock Exchange
At 10:00 AM:
- Bid Price: $50.00 (This means that the highest price a buyer is willing to pay for a share of ABC Corp is $50.00.)
- Ask Price: $50.10 (This is the lowest price at which a seller is willing to part with their shares of ABC Corp.)
The bid-ask spread in this scenario is $0.10 ($50.10 – $50.00).
If you wanted to purchase shares of ABC Corp immediately, you’d be looking at the ask price, since that’s what sellers are currently asking. Thus, you would pay $50.10 per share.
If you wanted to sell your shares of ABC Corp immediately, you’d receive the bid price, which is $50.00.
At 10:05 AM, after a positive news announcement about ABC Corp, new trades are executed, and the quoted prices change:
- Bid Price: $51.50
- Ask Price: $51.60
If you were to sell your shares now, you’d get $51.50 each, benefiting from the price increase following the positive news.
This example illustrates the dynamic nature of quoted prices in a market. The quoted price at one moment can change minutes, or even seconds, later based on new trades and information.
