Reviewed by Oct 05, 2020| Updated on
Quotations refer to stock, share, bond, or any other commodity sold at the latest selling price. Also, most asset classes often quote the price of the bid and ask for a price that will decide the final selling price. The bid is described as the highest price a buyer is willing to pay for the assets whilst the request is the highest price a seller is willing to receive for sale.
In a normal trading environment, it is typical for secure, liquid assets to report narrow bid-ask spreads. The pair would typically withdraw from global issues such as geopolitical events or large-scale downturns in the economy. The emergence of instability and uncertainty throws processes of supply and demand that disrupt quotations into flux.
Quotations aren't just about bidding and asking for prices. They also comprise low, open, high, and close values on a given day. A simple stock quote illustrates the key data points to give meaning to trends around the current day. Often, the gap between the open and close or high and low represents the ongoing trend. Sharp differences between the open and close signals, for example, are strong upward momentum and a fascinating trading opportunity.
Quotations reflect two sets of information for most asset classes: the price an investor would have to pay in order to purchase an asset at a given time (the lowest price asked by a seller) and the price the investor would get for the same asset if it is sold at the same time (the highest bid by a potential buyer). Together, the difference across the two reflects the expense of liquidity borne by an investor while selling an asset, since they have to buy at the bid price and sell at the requested price.
Most investors won't hesitate to connect the term quotation with stock prices, but many other asset classes record quotes of the last price traded. For instance, fixed income markets also quote the bid and ask prices of a bond during regular trading hours.
Mostly, investors will not hesitate to link the word quotation to stock prices, but many other asset classes will record last price quotes exchanged. For example, fixed-income markets often quote a bid and ask of bond prices during regular hours of trading.