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Definition of 'Quotation'

A quotation is a statement of the price at which a security, commodity, or foreign exchange is currently trading. It is also the price at which a seller is willing to sell a security or commodity and a buyer is willing to buy it.

Quotations are typically provided by market makers, who are firms that specialize in providing liquidity to the markets by buying and selling securities at quoted prices. Market makers make money by buying securities at a lower price and selling them at a higher price.

The bid-ask spread is the difference between the bid price and the ask price. The bid price is the price at which a market maker is willing to buy a security, and the ask price is the price at which a market maker is willing to sell a security.

The bid-ask spread is an important cost to consider when trading securities. The wider the bid-ask spread, the more expensive it is to trade a security.

There are a number of factors that can affect the bid-ask spread, including the liquidity of the security, the volatility of the security, and the time of day.

Liquidity refers to the ease with which a security can be bought and sold. Securities that are more liquid tend to have narrower bid-ask spreads than securities that are less liquid.

Volatility refers to the degree of price fluctuations in a security. Securities that are more volatile tend to have wider bid-ask spreads than securities that are less volatile.

The time of day can also affect the bid-ask spread. Bid-ask spreads tend to be wider during periods of low trading volume, such as early in the morning or late in the afternoon.

Quotations are an important part of the financial markets. They provide investors with the information they need to make informed trading decisions.

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