Clearing Price

DEFINITION of 'Clearing Price'

The specified monetary value assigned to a security or asset. This price is determined by the bid and ask process of buyers and sellers interested in trading the security.

BREAKING DOWN 'Clearing Price'

In any exchange, sellers prefer to part with their assets for the highest price possible while investors interested in buying the same asset desire the lowest purchase price possible. At some point, a mutually agreeable price is reached between buyers and sellers. It is at this point that economists say the market has "cleared" and transactions take place. Thus, the clearing price of an asset is the price at which it was most recently traded.

RELATED TERMS
  1. Seller's Call

    An agreement between a buyer and a seller for a specific grade ...
  2. Bid Price

    The price a buyer is willing to pay for a security. This is one ...
  3. Offer

    1. When one party expresses interest to buy or sell an asset ...
  4. Buyer's Market

    A situation in which supply exceeds demand, giving purchasers ...
  5. Bid And Asked

    A two-way price quotation that indicates the best price at which ...
  6. Negotiated Market

    A type of secondary market exchange in which the prices of each ...
Related Articles
  1. Term

    Negotiating the Bid

    A bid is an offer investors make to buy a security.
  2. Term

    How Bid Price Affects Liquidity

    The bid price is the amount a buyer will pay for a security.
  3. Home & Auto

    Ins And Outs Of Seller-Financed Real Estate Deals

    Seller financing works like this: Instead of a buyer receiving a loan from a bank, the person selling the house lends the buyer the money for the purchase.
  4. Home & Auto

    Tip No.3: Watch For Motivated Sellers

    If an owner is eager to sell, this can mean additional bargaining power for potential buyers.
  5. Professionals

    The Exchanges

    The most recognized stock exchange in the world is the New York Stock Exchange or the NYSE. There are however, many exchanges throughout the United States that all operate in a similar manner. ...
  6. Professionals

    Corporate And Municipal Securities Settlement Options

    Regular way transactions in corporate stocks and bonds and municipal bonds settle on the third business day or T+3. There are, however, times when either party to the transaction may request ...
  7. Investing Basics

    What is a Financial Market?

    “Financial market” is a broad term used to describe any forum where buyers and sellers meet to trade assets.
  8. Professionals

    The Exchanges

    The most recognized stock exchange in the world is the New York Stock Exchange or the NYSE. There are however, many exchanges throughout the United States that all operate in a similar manner. ...
  9. Professionals

    THE EXCHANGES

    The Exchanges The most recognized stock exchange in the world is the New York Stock Exchange or the NYSE. There are, however, many exchanges throughout the United States that all operate in a ...
  10. Active Trading Fundamentals

    What Does Bid And Asked Mean?

    Bid and asked is a two-way price quotation.
RELATED FAQS
  1. What does the variance between the bid and ask price of a stock mean?

    Find out how stocks are traded in the market, why the bid and ask prices are different and why the bid-ask spread is smallest ... Read Answer >>
  2. What can cause an asset to trade below its market value?

    Understand how market price can differ from actual fair value, and the reasons that an investment asset might trade below ... Read Answer >>
  3. How is it possible to trade on a stock you don't own, as is done in short selling?

    Understand how the process of short selling allows a person to sell a stock he or she doesn't technically own by borrowing ... Read Answer >>
  4. What do the bid and ask prices represent on a stock quote?

    Learn what the bid and ask prices mean in a stock quote. Find out what represents supply and demand in the stock market and ... Read Answer >>
  5. I don't understand how a stock has a trading price of 5.97, but when I buy it I have ...

    It might seem logical that the last traded price of a security is the price at which it would currently be trading, but this ... Read Answer >>
  6. What are the differences between Ex Works (EXW) and Free On Board (FOB)?

    Learn about Ex Works and Free on Board, the main difference between these Incoterms, and the responsibilities of buyers and ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center