Purchase Price


DEFINITION of 'Purchase Price'

The price that an investor pays for a security. This price is important as it is the main component in calculating the returns achieved by the investor.

Essentially, it can be thought of as the price that is paid for anything that is bought.

BREAKING DOWN 'Purchase Price'

For example, if an investor buys Ford stock at $15, then this would be the purchase price. When looking at the return on the investment, the investor would compare the purchase price of $15 to the price the investment was sold at or the current market price for Ford.

Purchase price can also refer to the price that a company pays for an item, such as another company. For example, if Ford bought Kia for $3.5 billion, this would be Ford's purchase price.

  1. Security

    A financial instrument that represents an ownership position ...
  2. Return On Investment - ROI

    A performance measure used to evaluate the efficiency of an investment ...
  3. Market Value

    The price an asset would fetch in the marketplace. Market value ...
  4. Ask

    The price a seller is willing to accept for a security, also ...
  5. Arm's Length Transaction

    A transaction in which the buyers and sellers of a product act ...
  6. Bid

    1. An offer made by an investor, a trader or a dealer to buy ...
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