Question

Harry wants to buy a stock. He calls his agent, Penelope, and asks that she enter the order at the market. Assuming that Harry gets an execution on his order, what price will Harry receive?[A] Harry's order will be executed at the quoted "last sale" price.[B] Harry's order will be executed at the opening price the following day.[C] Harry's order will be executed at the applicable "bid" price.[D] Harry's order will be executed at the applicable "ask" price.

Answer 1

Answer: C: Harry's order will be executed at the applicable "bid" price.

Explanation:

Bid price is the price at which a buyer is willing to buy the shares and Ask price is the price at which a seller is willing to sell the shares. When Harry wants to buy shares he will make a bid price, that means he is willing to buy x amount of shares at the bid price. When there is a seller willing to sell at the bid price then the order will be executed.