hmu.ai
Back to Finance Dictionary
Finance Dictionary

Bid Price

Definition

The price a buyer is willing to pay for a security.

Deep Dive

The bid price is the highest price a buyer is willing to pay for a security, commodity, or currency at a specific point in time. It represents the immediate sale price available to a seller. The bid price is a fundamental component of the bid-ask spread, which is the difference between this bid price and the asked price (the lowest price a seller will accept). A tighter spread generally indicates higher liquidity and lower transaction costs.

Examples & Use Cases

  • 1A stock market quote showing "Bid: $100.25," meaning a seller could immediately sell their shares for $100.25 each
  • 2A bond trader offering a bid price of $980 for a bond with a face value of $1,000
  • 3A forex broker displaying the bid price for GBP/JPY as 145.75, indicating that a trader can sell one British Pound for 145.75 Japanese Yen.

Related Terms

Asked PriceBid-Ask SpreadLiquidityDemand and Supply

Part of the hmu.ai extensive business and technology library.