This is an offer or proposal of some amount of money made by an individual or organization to purchase assets with particular conditions that pursue an opportunity to provide an asset that is for sale and can compete against other people to buy it, especially at a public sale of goods or property. Bid is also commonly known as an application presented by a person or a firm to a bid solicitor with the aim of being selected as a supplier or bids may also be made by companies that compete for project contracts. It can also be defined as a submission made by a prospective supplier in response to an invitation to tender. It makes an offer for the supply of goods and/or services.
Bids are made continuously by market makers for a security and may also be made in cases where a seller requests a price where they can sell. Sometimes, a buyer will present a bid even if a seller is not actively looking to sell, in which case it is considered an unsolicited bid.
The term “bid and ask” (also known as “bid and offer”) refers to a two-way price quotation that indicates the best potential price at which a security can be sold and bought at a given point in time.
The bid price represents the maximum price that a buyer is willing to pay for a share of stock or other security. The ask price represents the minimum price that a seller is willing to take for that same security. A trade or transaction occurs when a buyer in the market is willing to pay the best offer available—or is willing to sell at the highest bid. (read more here)
The difference between bid and ask prices, or the spread, is a key indicator of the liquidity of the asset. In general, the smaller the spread, the better the liquidity.
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