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There are weird incentives for this. In US the tick size for any stock is always $0.01. So a stock with a price of say $1 has a minimum bid ask spread of 1%, w
by rich_sasha 6y ago
There are weird incentives for this.
In US the tick size for any stock is always $0.01. So a stock with a price of say $1 has a minimum bid ask spread of 1%, which is a lot.
On the contrary, if one share is too expensive, it limits liquidity in a stock. This is usually bad, though Berkshire Hathaway voting shares are deliberately kept expensive to stave off speculators.
This then get meta-player. A split suggests the company expects a price increase, and vice versa (reverse splits area thing too).
- deleted 6y ago[deleted]
- esrauch 6y agoIt seems very strange; can a share not be worth less than 1 cent, or can it for ask but not bid?
- cynix 6y agoIt can be "worth" less than 1 cent. That simply means if you put in an offer at 1 cent, nobody will buy it, because they think it's worth less.
- esrauch 6y agoI meant if the bid-ask spread must be minimum 1 cent, then is it true that bid can't be lower than 1 cent as long as ask is semipositive?