The price at which a market-maker or institution is prepared to sell securities or other assets. Compare with bid price.
- Underpricing is estimated using the offer price and the opening price on the first day of trading.
- They assume that the means of the stochastic terms in both the reservation price and the offer price equations are zero, and so implicitly define the true price differently than we do.
- As long as the energy company buys at a lower bid price than it sells at its offer price, it earns the bid-ask spread on trading volume.
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