StockBoughtAndSold

StockBoughtAndSold - HOW A STOCK IS BOUGHT AND SOLD T he...

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HOW A STOCK IS BOUGHT AND SOLD T he following chart is a detailed explanation of how a stock is traded. It illustrates how one transac- tion looks from three different perspectives – the buyer, seller, and the stock market professionals who execute the trade. 1. Roger Smith of Des Moines, Iowa, decides to invest in the stock market. 2. Roger consults a broker who is a member of the New York Stock Exchange. They discuss a num- ber of possible long-term investments. Roger asks his broker for a quote – the highest bid (to buy) and the lowest offer (to sell) for a stock at any given time – on Gap Stores stock (GPS). 3. The brokers access an electronic market data system to obtain quotes on (GPS) Gap Stores stock from the NYSE floor. A number of information vendors offer this service to brokerage houses. The information vendors get quotes from the NYSE systems via direct high-speed lines. 4.
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