Understanding Stocks

UNDERSTANDING STOCK PRICES 51
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CISCO SYSTEMS (NasdaqNM:CSCO) - Trade: Choose Brokerage
Last Trade Change Prev Cls Open Volume
9:49am–15.06 +0.23 (+1.55%) 14.83 15.12 6,103,711
Day’s Range Bid Ask P/E Mkt Cap Avg Vol
14.96–15.19 15.05 15.07 40.08 108.8B 81,647,045
52-wk Range Bid Size Ask Size P/S Div/Shr Div Date
8.12–21.92 22,300 10,400 5.55 0.00 22-Mar-00
1y Target Est EPS (ttm) EPS Est PEG Yield Ex-Div
15.34 0.37 0.54 1.27 N/A 23-Mar-00
Figure 5-2
Chart, Financials, Historical Prices, Industry, Insider, Messages,
News Options, Profile, Reports, Research, SEC Filings, more . . .
Bid: This is the price you will receive if you want to sell the stock.
Ask: This is the price you will pay if you want to buy the stock.
Previous Close: The stock closed at this price on the previous day.
When you look at the detailed stock quote in Figure 5-2, you will
see two stock prices, one higher than the other. These are the bid price
and the ask price. The bid and ask prices are extremely important but
also confusing (at least they were to me).
The lower price (the one on the left) is the bid price (or offer price),
which is the price you will receive if you own the stock and want to sell
it. In Figure 5-2, the bid price for Cisco is $15.05. The higher price (on
the right) is the ask price, the price you will have to pay if you want to
buy this stock. The ask price for Cisco is $15.07.
The difference between the bid and ask prices is called the spread. In
Figure 5-2, the difference between the bid price ($15.05) and the ask price
($15.07) is 0.02. A few years ago, when stock quotes were in fractions,
the spread on some stocks was very high, sometimes as much as a dollar.