When buying stock in a company is it the current value per share the price you pay when buying it?

Question

When buying stock what is the price you pay for the shares? Is it the current value of the shares? For example, lets say the current value for a stock is $20.00 and I buy 200 shares does that mean I get 200 shares? If so then why does the asking price tend to be higher than the current value of the stock?

Answer 1

Current value is usually the value of the last trade.  Asking price is usually what you have to pay if you ask for a "market order".  That's what people are currently asking to sell their shares.

You might want to research "limit orders".  That's a type of order where you say "I'll buy 200 shares, but at no more than 20.00 per share".  It locks in your cost, but you might not always find a seller.

Answer 2

At any given time while markets (or extended markets) are open, ask is what people are offering to sell it for, bid is what buyers are willing to pay.  Both ask and bid can constantly fluctuate.

If you enter a market buy order, you end up paying whatever ask is for those shares at the moment.  If you enter a limit buy order, it fills if anyone offers that ask or enters a market sell order (or might not fill at all).

Bid and ask can have a wider spread when normal markets are closed because trading is light then and some people simply throw out a wild price hoping for a sucker.

Answer 3

In a open market, value is an amount that a buyer is prepared to pay for (bid) while a seller is prepared to sell (ask). Last closing price on a stock exchange is usually viewed as the current value. But in fact, it can fluctuate greatly if there are elements affecting the willingness of a buyer and a seller at any minute.