Market Price Definition:
Market price is the price being charged for an item on the open market.
OR
The current price at which an asset or service can
be bought or sold. Economic theory contends that the market price converges
at a point where the forces of supply and demand meet. Shocks to either the
supply side and/or demand side can cause the market price for a good or
service to be re-evaluated.
For example, suppose that the market price for a
widget has been $10 for a number of years. Suddenly, the market price shifts
to $20 when it is announced that only half of this year's widgets will be
sold in stores. In this case, a drop in supply causes the market price to
increase.
In regard to stocks, the market price of a stock is the most recent price
at which the stock was traded. It does not guarantee that an investor will
receive the same price upon buying the stock afterward. For example, suppose
that a company's stock has been halted from trading because it was planning
to release some material news in the next hour. While the market price of
the stock at the time will be the last price at which the stock traded,
buying the stock when trading resumes will definitely yield a different
price.
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