Market Conditions

• During active trading, the time that elapses between when you give your broker a buy or sell order to when the transaction is completed can cause the two prices to differ, but generally not by more than a few cents. If purchased directly from a dealer, the ask price and actual price should be the same. However, because share prices are generally delayed by a few minutes, extreme volatility in the market on any given day could cause a stock you are interested in to have a significantly different ask and actual price. This is the exception, not the general way the market operates on a typical trading day.
  
  

Identification

• Basically, the ask price for a stock is the lowest price at which a dealer or broker will sell you shares. Often heard in conjunction with the ask price is the term "bid price." The bid price is the highest price at which a dealer will buy shares of stock. Stanley G. Eakins, author of "Finance: Investments, Institutions, Management," offers this catchphrase as a way to remember the difference between bid and ask: "Dealers buy at the bid." During the time it takes to complete the transaction, the actual price of a stock can change.
  
  

Related Terms

• An additional term often thrown into the mix of ask, bid and actual prices, is the offer price. An offer price is synonymous with the ask price, the least amount a seller will accept at the time. When "the spread" is quoted, it means the difference between a specific ask price for a stock and the bid price for the same shares. For example, suppose you want to buy a particular stock for $50 and a seller is willing to sell for $50.50. Fifty dollars is your bid price. The $50.50 is the seller's ask or offer price. The spread would be 50 cents.
  
  

Limit Order

• To eliminate a possible difference between an ask price and an actual price, you can place a limit order with your broker. A limit order specifies the exact price range in which you are willing to trade a particular stock as well as the time limit for the order to remain in effect. In placing a limit order, you need not be concerned with any discrepancy between the ask price and the actual price of a stock.