What term refers to the price at which a dealer is willing to purchase a security from a seller?

What term refers to the price at which a dealer is willing to purchase a security from a seller?

• A. Ask
• B. Bid
• C. Spread
• D. Offer

Answer: (B)

The term that refers to the price at which a dealer is willing to purchase a security from a seller is known as the bid. The bid price is an important concept in trading because it indicates the maximum price that a buyer is willing to pay for a security at a given time. This concept is crucial for traders as it helps in determining the market value of a security and impacts trading strategies. In the context of the options provided, the ask (or offer) refers to the price at which a seller is willing to sell a security. The spread represents the difference between the bid price and the ask price. Understanding these terms and their relationships is essential for engaging with the financial markets effectively.

The term that refers to the price at which a dealer is willing to purchase a security from a seller is known as the bid. The bid price is an important concept in trading because it indicates the maximum price that a buyer is willing to pay for a security at a given time. This concept is crucial for traders as it helps in determining the market value of a security and impacts trading strategies.

In the context of the options provided, the ask (or offer) refers to the price at which a seller is willing to sell a security. The spread represents the difference between the bid price and the ask price. Understanding these terms and their relationships is essential for engaging with the financial markets effectively.