Question

You would like to buy shares of Coldwater Creek, Inc. (CWTR). The current ask and bid...

You would like to buy shares of Coldwater Creek, Inc. (CWTR). The current ask and bid quotes are $20.20 and $20.16, respectively. You place a market buy order for 220 shares that executes at these quoted prices. How much money did it cost to buy these shares?

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Answer #1

Ask price is a price at which sellers of securities are ready to sell (so if we need to buy ,we need to purchase at price at which sellers are ready to sell)

Bid price is a price at which buyers of securities are ready to buy (so if we need to sell ,we need to purchase at price at which buyers are ready to buy)

cost to buy = order size *ask price

                       = 220 * 20.20

                          = $ 4444

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