You reluctantly agree to be a part of an auction, as in: you’re being auctioned off. Well, a date with you, anyway. For charity. You get to be nice and either get your ego brushed or...bashed.
You’d prefer the former to the latter, so...you tell the auctioneer you’ll only do it if someone in the audience agrees to bid at least $50 for you. You think a date with you is at least worth $50.
You could call that $50 your reserve price, the minimum price that the owner of the thing being auctioned will accept as the winning bid.
You could imagine how this would be important for auctioning off things, rather than dates. If you could sell a giant glass vase for $500 on the market, and it sold in an auction for $300, you’d feel like a Silly Willy for auctioning that vase. You can set a reserve price as insurance, in case it gets auctioned for...less than you'd like.
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Finance: What is an Auction Market?13 Views
Finance a la shmoop... what is an auction market.. next up on the block [Man speaking on stage]
we've got stock in the company comb Depot....
okay yeah so the New York
Stock Exchange is an auction market and you have no idea how much caffeine I had [Man holding a monster energy drink]
to have to get that right which means that the prices on the new york stock
exchange happen during a bidding process we're matching offers get you know [People frantically rushing to bid for stocks]
matched... buyers and sellers buy and sell at the
same time so in essence two transactions are happening at once the opposite of
this sort of market is the over the counter or OTC market where dealers are
the ones holding all the cards and they ultimately determine the price by [Dealer with the cards]
creating a spread from where they're willing to sell your shares and what
price they'll pay to buy your shares but in an OTC market well you don't get to [Dogs running side by side]
feel like you're watching the last leg of a greyhound race so you don't get all
my caffeinated auction talk there which is kind of cool we like that, right..right?
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