Anonymous
Anonymous asked in Business & FinanceInvesting · 1 decade ago

How accurate are the prices of stock on NASDAQ and other listings like SP500? Accurate or not?

Can people& companies sell or buy stock for prices different than what SP500& NASDAQ say the stock is worth

on their exchange? For example, Does the company tell NASDAQ or Sp500 what price they want their stock to sell for? And do people make their own offers, haggaling for what price they want to buy stock at,

example, someone wants to buy 100 shares of wallmart stock, each share at this time is, $50 , so instead of paying the full $5,000 for this , they just offer $4,500 or something like this? If so, then does mean that the value of the stock on the exchange is not really accurate?

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  • 1 decade ago
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    <<<How accurate are the prices of stock on NASDAQ and other listings like SP500? Accurate or not?>>>

    They are accurate. They represent the price of the last trade which may not be the same as the price of the next trade.

    <<<Can people& companies sell or buy stock for prices different than what SP500& NASDAQ say the stock is worth on their exchange?>>>

    The quotes given simply tell you the price at which it traded. They do not represent how much it is worth.

    <<<For example, Does the company tell NASDAQ or Sp500 what price they want their stock to sell for? >>>

    No. The price is set when a buyer and a seller agree on a price. The company is not involved.

    <<<And do people make their own offers, haggaling for what price they want to buy stock at>>>

    Some people submit "market orders" which say use the best price available without haggling. Other people use "limit orders" which specify the highest price they are willing to pay (if buying) or the lowest price they are willing to accept (if selling).

    <<<someone wants to buy 100 shares of wallmart stock, each share at this time is, $50 , so instead of paying the full $5,000 for this , they just offer $4,500 or something like this?>>>

    That is a limit order and people do it all the time. However, that does not mean the order will be filled. If I put in a limit order to buy Walmart for $5.00 per share less than the last trade I could be almost positive that other people would have submitted limit orders with higher prices so my offer would not be filled.

    <<<If so, then does mean that the value of the stock on the exchange is not really accurate?>>>

    As I said earlier, the quotes reported are the price at which the last trade took place. That figure is reported accurately. The "value of the stock" (or what "the stock is worth") is a subjective figure, based on someone's best guess as to what will happen in the future.

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    If you want to know the most someone is willing to pay for a stock at any given time you can look at the "bid" quote. That represents the highest amount that a person is willing to pay for the stock at that instant in time. If you want to know the lowest price at which someone is willing to sell the stock you can look at the "ask" quote. With a heavily traded stock like Walmart the bid and ask quotes are quite close to each other almost all the time. With a thinly traded stock the bid and ask quotes may be further apart. For an example look at the bid and ask quotes for BDMS when the market is open.

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    By the way, the S&P500 is not an exchange and they do not provide quotes. The S&P500 is an index, representing the value of 500 large cap companies.

  • 5 years ago

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    6 years ago

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