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What Does "Best Ask" Mean?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 23 September 2014
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With investments and other types of financial transactions, “best ask” is a term that is used to describe the lowest price that a seller is willing to entertain in order to agree to sell an asset. Sometimes known as the best bid or the best ask price, the best ask is normally selected from a range of bids submitted by various potential buyers known as market makers. While most sellers will seek to secure the highest price possible for the holdings they offer for sale, extenuating circumstances may occur that prompt the sale to the low bidder rather than a higher one.

When it comes to selling shares of stock, the best ask refers to the lowest quoted ask price connected with the sale of a given block of shares. When placed for bid, buyers are allowed to make offers that may range anywhere from just below the current market value of the shares to any amount above that value they so desire. Buyers often base their bids on the perceived future movement of the value of those shares, determining how long it would take to recoup the initial investment and actually begin to make some earn some sort of return. Sellers in turn also determine which buyer to work with, based on factors such as the quoted bid price, the reputation of the buyer, and how quickly the seller wants to complete the transaction.

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At times, a seller may set a best ask as the means of converting assets into cash quickly. This is often the case when the owner of the stocks or other type of asset has encountered some sort of financial reversal and must settle an outstanding debt quickly. In the event that the seller makes it known what price he or she is willing to settle for, there is little chance that buyers in general will offer more than the desired amount, unless other buyers come along and make offers that are above the best ask. At that point, a bidding war may ensue, requiring the seller to determine which of the bidders to do business with.

Since the best ask represents the absolutely lowest figure that a seller will accept when selling an asset, many buyers use that figure as the starting point for price negotiations. Depending on the current value of that asset, how desirable it is to buyers, and what each buyer believes he or she will ultimately gain by owning the asset will all determine if the item sells at or above the best ask. In either scenario, both parties to the transaction win, since the seller receives an amount he or she considers equitable and the buyer obtains ownership for an amount that is within his or her price range.

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