What Is Quotation?
Let me tell you directly: quotations in finance are the most recent sale price of a stock, bond, or any other traded asset. They also include the bid and ask prices that set the final sale. The bid is the highest price a buyer will pay, and the ask is the lowest a seller will accept. For stable, liquid assets, you'll see narrow bid-ask spreads in normal trading, but volatility from events like geopolitical issues or market downturns can widen them, shifting supply and demand.
How Quotation Works
You need to understand that quotations give you two key pieces: the price to buy an asset right now (the lowest ask from sellers) and the price you'd get if selling (the highest bid from buyers). The difference is the liquidity cost you face when trading. As an asset's price drops, the bid and ask diverge, making it less liquid and harder to trade in volatile markets. Quotations aren't just bids and asks—they also cover the high, low, open, and close for the day, giving context to movements. Sharp changes between open and close often signal strong momentum and potential opportunities.
Types of Quotations
While you might think of quotations mainly for stocks, they apply to other assets too. In fixed income markets, bond quotations include bid and ask, plus par value and yield to maturity. Bonds are quoted as a percentage of their $1,000 par value, converted to a point scale—for example, a quote of 97 means 97% of face value, so $970 to buy. Par value is the original bond value, like $100 or $1,000, and it stays fixed even as market value changes; it sets maturity value and interest payments, known as the coupon rate.
For futures and commodities, quotations work similarly but involve agreeing to buy or sell at a set price later. You use these to hedge or speculate. A futures contract means you're locked in—for instance, buying oil at $80 a barrel in a year obligates you to that deal. You don't pay the full amount upfront; just an initial margin to your broker.
Example of a Quotation
Take Apple Inc. (AAPL) as an example—it's highly liquid with narrow spreads. Suppose it closed at $165 after ranging from $161 to $167. At 10:30 am, trading at $163, the bid might be $162.99 and ask $163.01—a two-cent spread. You'd pay the ask to buy, and the seller delivers. When people mention a quote, they usually mean this last trade price, the big number you see first in stock research.
Frequently Asked Questions
How do you read a stock quote? Look at the main quote for the current price; for trading, check the bid (what sellers offer) and ask (what buyers pay)—the spread is where profits are made. What are real-time quotes for stocks? They're updated instantly on advanced platforms, useful for high-frequency traders, though some say it favors those with better tech. What is a nominal quotation? It's a hypothetical 'what if' price, marked FYI or FVO, unlike firm real quotes. What is an interdealer quotation system? It's a setup for organizing broker and dealer quotes, like Nasdaq's systems in the US, to give accurate info to investors.
The Bottom Line
Finding a quotation is straightforward—it's usually the first number you see for a stock's price. If you're just checking value, that's enough, but for trading, consider the bid-ask spread and execution time. Quotes update via tech, but speeds vary by platform. Remember, stock quotes are key, but always pair them with technical indicators before orders.
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