Ask price

An ask price is the price a prospective seller wants from the buyer when selling an asset. It is often called the offer price, or simply the ask.

The ask or offer price usually states the amount of asset on sale, which could be the number of shares, bonds or the desired value of a base currency.

The ask price is not the same as the current price, which is the price the security was sold for the last time it was traded. An ask price could be lower or higher than the current price, depending on the seller's perceived value of it in current market conditions.

The ask in a spread

The opposite of the ask price is the bid price (the price offered by the prospective buyer) - the difference between the two is the bid/ask spread, or more commonly just the spread.

Ask prices in trading

In trading, the ask price is the lowest price the seller is willing to accept for the asset they are offering for sale and will be displayed as such on the quote services on a trading platform. Conversely, the bid price shown will be highest a buyer is willing to pay for their purchase.

For traders dealing in over the counter (OTC) stocks, the ask price is the best quoted price at which the seller is willing to sell. Traders selling shares of mutual funds the ask price is the net asset value plus selling fees. In commodity trading, the ask is the lowest price the commodity seller is willing to sell that commodity for.

Ask prices in a bidding war

Sometimes an investor or trader may make an unsolicited bid for something that is not actually for sale. This is most commonly seen in company takeovers when an investor acquires enough shares to put them in a strong enough position to buy the whole company or a controlling share of it. The owners of the company or other asset may choose to reject the bid, but they may also offer to sell but for a higher ask price.

If more than one unsolicited bid is received, this is known as a bidding war. As bidders bid against each other and push up the bid price (as happens in an auction), the owner of the asset may decide to raise their ask price if they are willing to sell. If the trade is concluded, the owner may receive a far higher ask price than they expected as the winning bidder runs the risk of overpaying, that is paying more than the purchased asset is actually worth and more than the ask price. In such a scenario, the asker makes a huge profit.

See also bid price.

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