What It Is:
The best ask is the lowest price offered by a stock’s market makers to sell a security. For stocks, the best ask is quoted in dollars. For bonds, the best ask is quoted as a percentage of face value or (for Treasuries and other discount bonds) as a percentage discount from face value.
 
How It Works/Example:
Let’s assume the shares of XYZ Company trade on the Nasdaq and there are four market makers for the stock. At the day and time you are considering placing your order to purchase XYZ Company stock, the market makers are asking the following prices for the stock:
 
Market Maker A          $45.25
Market Maker B          $45.50
Market Maker C          $45.00
Market Maker D          $45.25
 
In this example, market maker C, who is offering to sell the stock at $45 per share, has the best ask.
 
Now let’s look at the ask prices for the four market makers of XYZ Company bonds:
 
Market Maker A          99.75
Market Maker B          99.50
Market Maker C          99.50
Market Maker D          99.25
 
In this example, market maker D has the best ask because it is willing to sell for 99.25% of its face value.
 
Note in both examples that we have ignored ask size; the investor should consider the number of securities offered by the market makers when evaluating prices. Also note that the current price of a security is the price at which it last changed hands; the best ask is the price at which a market maker is currently willing to sell. The SEC requires brokers to guarantee their customers the best available ask price.
 
Why It Matters:
The market maker presenting the best ask usually receives the next order. This is important to day traders and other investors who trade very quickly. Delaying a trade by just a few minutes can expose the investor to the risk of completing the trade at a less favorable price.
 
The best ask is a component of the inside spread, which is the difference between the best ask and the best bid. Some traders and analysts purchase access to services showing all bids and ask prices on a particular security. Not only can this provide clues about a security’s price trends, it may also indicate which of the market makers has the most influence on a security’s ask price.
 

Income Security of the Month If you're looking for high yields, monthly payments and unprecedented safety from your investments, then you need to learn more about our "Income Security of the Month" for November 2008. This stable preferred stock has a long track record of paying some of the most solid dividends in Wall Street history. In fact, the preferred issue pays a monthly dividend totaling 10.3% annually and has outperformed the S&P 500 by more than +44 percentage points over the last year!

Top 10 Stocks for 2008! Since we began publishing this report back in 2003, the picks we've featured have consistently beaten the broader market -- delivering average gains of +21.3% per year and outperforming the S&P by a nearly 2-to-1 margin. Act now to reserve your copy of our newest report -- Top Ten Stocks for 2008.