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How much stock can I buy 'at market' price?

Wednesday 23rd January 2002

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Q: Am I allowed to buy as much of a stock I want at the market price? Can you please explain the term supply and demand?

A: You cannot buy as many shares as you like 'at market' prices because generally there is a limited amount of shares available at the current market price. Once these have been purchased then the price will move up to the next offer to sell these shares.

This is an example of the market for TEL:

BidOffer
Broker AB5,0006.506.541,000Broker XY
Broker BC10,0006.496.54500Broker BC
Broker AB25,0006.476.5810,000Broker YZ

If someone wished to purchase 2,000 Telecom shares 'at market' in this example, then they would buy 1,500 shares at $6.54 and then the market price would move to the next lowest offer, which is $6.58. The number of shares on offer at any one price depends on how many people are willing to sell their shares at that price.

Supply and demand is an economic theory. In basic terms it means that the price for any particular product or service (or share) is determined by the availability of that product or service (supply) against how many people want to buy that particular product or service (demand). If there are more willing buyers than sellers, a price tends to go up. If there are more willing sellers than buyers, the price tends to go down.

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