Corporation: A corporation is a separate legal entity which is separate from its owners. It is an artificial body and continues to exist even after the death of its owners where in such case the ownership is transferred. The owners are separate from the legal body and hence they are not liable for any obligation of the corporation individually. Similarly, the corporation is also not liable for any of the personal obligations of its owners. Bid Price The price at which the market maker is ready to buy the stocks is known as the bid price. Ask Price The price at which the market maker is ready to sell the stocks is known as the ask price. Bid − Ask Spread The bid price and the ask price offered by any trader is different so that they can make profit. Therefore, the difference between the bid price and the ask price is known as the Bid-Ask Spread. They always keep the ask price higher than the bid price for the purpose of making profit. To Identify: The price of each share that one would be willing to pay to buy or sell the Y company.

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Chapter 1, Problem 21P

Summary Introduction

Corporation:

A corporation is a separate legal entity which is separate from its owners. It is an artificial body and continues to exist even after the death of its owners where in such case the ownership is transferred. The owners are separate from the legal body and hence they are not liable for any obligation of the corporation individually. Similarly, the corporation is also not liable for any of the personal obligations of its owners.

Bid Price

The price at which the market maker is ready to buy the stocks is known as the bid price.

Ask Price

The price at which the market maker is ready to sell the stocks is known as the ask price.

Bid − Ask Spread

The bid price and the ask price offered by any trader is different so that they can make profit. Therefore, the difference between the bid price and the ask price is known as the Bid-Ask Spread. They always keep the ask price higher than the bid price for the purpose of making profit.

To Identify:

The price of each share that one would be willing to pay to buy or sell the Y company.

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