Guide to Analysing Companies

Bid-offer spread
The difference between the lowest price at which a seller will
offer goods, services or a financial instrument and the
highest price that a bidder will pay for them. Called bid-asked
(on over-the-counter markets) and bid-offered (on stock
exchanges) in the United States, the two figures together con-
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stitute a quotation or quote for a security. In the
foreign-exchange markets, banks quote two prices: the
highest price that the bank (as a buyer) will offer for a particu-
lar currency; and the lowest price it will accept for it (as a seller).
So if a company’s shares are bid at $35 each and offered at $37,
the spread will be $2. If the shares fall out of favour, the spread
could widen to $3 if the bid drops to $33 and the offer is $36.
Big Bang
The name of a theory about the creation of the universe; also used
to describe what occurs on the day when a significant financial
market removes a swathe of old-fashioned rules and regulations.
It has since come to symbolise the effect on a market of abrupt
and far-reaching change. The phrase started to be used in the fi-
nancial world to describe the deregulation of the london
stock exchange on October 27th 1986. From that date:
 stockbrokers were obliged to abandon their long-
standing fixed scale of commission;
 for the first time foreigners were allowed to own a
majority stake in a UK broker; and
 dual capacity was introduced, allowing brokers to be
market makers and vice versa.
The biggest bang on the day, however, came from the Stock
Exchange’s newly computerised dealing and quotations system,
which collapsed under the strain. The US equivalent of Big Bang
was called Mayday and took place on May 1st 1975, the day on
which minimum commissions were abolished on the new
york stock exchange.