CLOSE PRICES. By reason of the method in which busi ness is conducted on the London Stock Exchange, every security— bond, stock or share—that possesses a free market, is quoted at a double price. At the higher price, the purchaser can expect to buy ; at the lower, he is able to sell. Prices quoted in the Stock Exchange Official List, and those in the newspapers, are usually wider than those at which bargains can be effected by either party, buyer or seller. To take the 5 per cent. War Loan as an example, this may be quoted ioo2 to Iooi in the daily Stock Exchange Of ficial List, a margin of 5s. between selling and buying. But the actual dealing price will show no more than 25.6d. difference. If the market is dull, owing to sellers predominating, the price will probably be 1 oo Z ,to loci; the buyer pays 100i in this case, the middle price of the official quotation, while the seller receives Tool. Should buyers be in the majority, the price is more likely to be Loot to loot when the seller would get the middle price, i.e., IooR. In a quiet market, the price might lie midway between the outside margin of Tool to Ioo4 and be quoted mop, to moil-.
The Cause of Close Prices.—The closeness of a price depends entirely upon the amount of business that is doing in a particular stock or share at a particular time. If the Stock Exchange dealer in War Stock finds himself very busy, with brokers coming to deal with him in rapid succession, some as buyers and others as sellers, he can afford to make a closer price than is possible when public business runs at a low ebb. In the first case, therefore, he may make a sixteenth price; say, for example, Tool to Ioofk, feeling reasonably confident that, in the activity shown by the public deal ings, he will be able to sell at I oot& the stock for which he pays Ioo-. If demand quickens, the price goes up; if stock comes in, the market gives way. Should business fall off, the price widens again. When a stock rarely changes hands, the margin between buying and selling prices may be considerable, because the Stock Exchange jobber, if he sells, may not be able to obtain the stock for some time ; if he buys, he runs the risk of not being able to dispose of it. Therefore he makes a wide price by way of insur ance against accident, just as he will make a close price when activity of business conditions warrants his doing so.
The Two Factors.—Competition can become so keen in some particularly popular share, or market, that dealers will make ex tremely close prices. The existence of a market outside London acts as a stimulus to animation and close prices. Bristol has a lively market, for example, in some of the tobacco shares; Glasgow in J. & P. Coats, chartered, etc. ; Paris in Rio Tintos and certain South Africans; Brussels in Brazilian Tractions and Tanganyikas; New York in Canadian Pacifics, and so on. The degree of closeness quoted in any price will expand and contract like a concertina; it is mainly dictated, as previously observed, by the volume of public business, and by competition in the Stock Exchange market con cerned.