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Bid Price

Reviewed by Vineeth | Updated on Sep 30, 2020

Catalogue

Introduction

The bid price is defined as the amount that an investor is willing to pay in order to purchase a commodity, security, or contract in the market.

Understanding Bid Price

If a seller is asking Rs 100 for an asset and the buyer is willing to spend Rs 75, then Rs 75, in this case, is considered the bid price. The difference between the selling price and the bid price is known as the spread.

Factors to Consider

  1. The bid price is the highest sum a potential buyer is ready to pay in exchange for an asset.

  2. The bid price is typically arrived at by negotiation between the buyer and seller.

  3. If there are multiple interested buyers, then a bidding war would be initiated, and the highest bidding price quoted by a bidder is considered the selling price.

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