Series 99: 2.1.1.3 Quotations

2.1.1.3  Quotations

The term quotation refers to two numbers: the highest bid price currently available for a security or commodity and the lowest ask price currently available for the same security or commodity.

Recall that the bid price is the price at which a market maker is willing to buy a security. The best bid is considered the highest bid because the customer wants to sell the security at the highest possible price. An ask, or offer, price, is the price at which a market maker is willing to sell a security. The best offer/ask price is the lowest one because the customer wants to buy the security at the lowest price. The best bid is always lower than the best ask. The difference between these is often called the spread, which represents the market maker’s compensation for taking the risk to