Bid and Ask

The Bid is the highest price a buyer is willing to pay for a security, while the Ask is the lowest price a seller is willing to accept. The difference between the Bid and Ask prices is called the spread, influencing trading and liquidity.

Related Terms

Basket Trades

Basket Trades involve buying or selling a group of securities simultaneously. Typically used by institutional investors, this strategy allows traders to execute multiple trades at once, often for managing portfolios or replicating an index, helping to save time and reduce transaction costs.

Basis of Allotment

Basis Allotment is the process of allocating shares to shareholders, typically seen in an IPO. Shares are distributed based on prior agreements and specific conditions that must be met before issuance, ensuring an orderly allocation among investors participating in the offering.

Basis

Basis is the difference between the futures price & the current cash price of the same commodity. It is calculated as the cash price minus the futures price. Changes in basis impact the effectiveness of futures as a hedging tool, typically using the nearest contract month.

Bluechip Fund

A Bluechip Fund is a mutual fund that invests in bluechip stocks, which are large, established companies with a proven track record of stable returns. These stocks tend to perform well even in adverse market conditions. Investors can track performance using the Bluechip Index. 

Bonds

Bonds are fixed-income securities issued by governments or corporations in exchange for a loan. They provide a fixed interest rate over a specified time period. The quality of a bond is determined by its credit rating, reflecting the issuer’s creditworthiness.

Book Building

Book Building is a price discovery method used during an IPO, where the company issuing shares does not fix a specific price. Instead, an underwriter invites institutional investors to submit bids within a price range, which helps determine the final issue price based on demand. 

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