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In finance, the term “offer” refers to the lowest price a seller is willing to accept for a security, asset, or service. It is also known as the “ask price.” Buyers use the offer price to determine their purchasing price, while sellers use it to determine the minimum amount they are willing to receive for a transaction.


The phonetic spelling of the keyword “Offer” would be:/ˈɒfər/ (British English)/ˈɑfər/ (American English)

Key Takeaways

  1. The term “Offer” generally refers to a proposition presented by a seller to a potential buyer, suggesting the purchase of a product or service at a specific price and under specific conditions.
  2. An offer is a crucial part of any sales or negotiation process, as it forms the basis of an agreement between parties. It typically includes details such as price, description of the good or service, payment terms, and any other relevant conditions.
  3. A legally binding offer can lead to the formation of a contract if it is accepted by the other party without any modifications or counteroffers. The contract is considered enforceable once the acceptance is communicated to the offering party.


The business/finance term “offer” is important because it represents the price at which a seller is willing to sell a security, asset, or service. This term plays a crucial role in various financial transactions, such as trading stocks, bonds, and commodities, as well as negotiating deals and contracts. An offer helps determine market prices, which are vital for establishing a fair and competitive marketplace. By providing a clear indication of the seller’s price expectations, offers facilitate efficient trade and contribute to overall market stability, enabling informed decision-making for both buyers and sellers. Ultimately, understanding offers and their significance in the financial world is essential for effectively participating in various economic activities and making sound financial decisions.


Offer plays a crucial role in the world of finance and business as it serves as a basis for initiating transactions, ensuring a smooth and efficient market environment. It represents the price at which a seller is willing to sell a security, commodity, or other financial instrument, thus facilitating the exchange of goods and services. The key purpose behind making an offer is to create an opportunity for buyers to purchase certain products at the seller’s desired price. This price is often negotiable, and buyers can either accept the offer or make a counter-offer. As a result, offers foster competition and stimulate economic activity, allowing businesses to assess supply and demand and effectively allocate resources to maximize revenue and growth. Moreover, the concept of offer is frequently used to determine market prices, enabling investors to gauge the value of various financial instruments, such as stocks and bonds. By analyzing the difference between the highest offer (the lowest price a seller is willing to accept) and the lowest bid (the highest price a buyer is willing to pay), known as the bid-ask spread, market participants can estimate the liquidity and volatility of an asset and make informed decisions about potential investments. In this context, offers help establish transparency and fairness in financial markets, and serve as a critical tool for investors seeking to optimize their portfolio returns and diversify risk.


1. Initial Public Offering (IPO): A classic example of an offer in business/finance is when a company goes public by issuing its first stock shares to investors in an IPO. In this case, the company offers its shares for sale at a specified price, allowing interested investors to purchase the shares. For example, when Facebook completed its IPO in May 2012, it offered 421.2 million shares at an initial price of $38 per share. 2. Acquisition Offer: A real-world example of an offer in the context of mergers and acquisitions is when one company proposes to purchase another company or its assets. In 2016, Microsoft made an offer to acquire LinkedIn for $26.2 billion. Microsoft offered $196 per LinkedIn share, a 50% premium over the stock’s closing price before the announcement. The LinkedIn board of directors accepted the offer, which led to a successful acquisition. 3. Real Estate Purchase Offer: In the real estate market, an offer is made when a potential buyer submits a written proposal to the seller, outlining the terms and conditions by which they are willing to purchase the property. This often includes the purchase price, contingencies, financing terms, and requested concessions. For example, a home buyer may offer to purchase a house listed for $350,000 at a slightly lower price of $330,000, with specific financing conditions and a request for the seller to cover closing costs.

Frequently Asked Questions(FAQ)

What is an offer in finance and business terms?
An offer refers to a proposal to buy or sell a specific financial instrument or a commodity at a certain price and quantity. In the context of stocks, for example, it would mean a proposal to sell shares at a given price.
What is the difference between an offer and a bid?
An offer is a proposal to sell an asset, while a bid is a proposal to buy an asset. The offer is usually higher than the bid, as the seller wants to get the highest possible price, while the buyer wants to pay the lowest possible price.
How is the offer price determined?
The offer price can be set by the seller based on various factors like the current market value, the perceived value of the asset or commodity, and the desired profit margin. In some cases, sellers may also consider historical pricing data or engage in negotiations with potential buyers to determine the offer price.
What is an initial public offering (IPO)?
An initial public offering (IPO) is the process through which a private company goes public by offering its shares to the general public for the first time. The company will set an offer price for its shares, and investors can buy shares at this price during the IPO process.
Can an offer be withdrawn or modified?
Yes, depending on the market regulations and the terms set out by the seller, offers can be withdrawn or modified. In certain cases, if an offer has not yet been accepted, the seller may choose to cancel, change the offered price, or adjust the terms of the sale.
What is a counteroffer?
A counteroffer is a response to an initial offer that includes changes to the terms of the original proposal. It typically entails a revised price, quantity, or contract provisions. A buyer might counteroffer a seller’s initial price with a lower bid, or the seller could counteroffer a buyer’s bid with a higher asking price.
What is the relationship between an offer and market demand?
The offer price is a critical factor in determining market demand for a specific asset. If an offer price is too high, it may limit the number of interested buyers, while a lower offer price will generally result in an increase in market demand.

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