Share advice

[Chris Hogg]

A relative has recently died, and I'm the executor. The relative had a few shares in Lloyds Banking Group, as a result of having an account with the Halifax in the days when it was a Building Society (which then became a bank, which then merged with Bank of Scotland to become HBOS, which then got taken over by Lloyds when HBOS crashed). I need to get a value for the shares on the date the relative died. Not difficult in principle, plenty of share price listings on the net, but I'm a little confused by the bid and offer categories. I (think I) understand what that means, but which are the prices commonly listed, bid or offer?

[dennis]

Or mid prices.

The shares are worth the bid price as that is the most someone is going to pay you for them.

[tim.....]

the simple clue is:

you get to sell at the lower number but buy at the higher number (the bit in the middle is the broker's cost/profit/risk)

tim

[The Natural Philosopher]

If you have two prices the lower is the offer and is what the share is/was worth: the bid price is what you have top pay to get it.

[Chris Hogg]

Yebbut...that much I realise, but I didn't know which one is the one quoted on stock market listings.

Since posting the question, more Googling has revealed that the quoted price is the bid price.

Thanks to all.

[michael adams]

The single prices listed, which is what you're interested in, are the prices at which the stock last traded as reported on the exchange prior to the list being compiled or being shown live online. Commonly known as the "current price" although this is often dependent on the quantity sold.

If the price is given as say 200 then the buyer will have paid the offer price of 200, but the seller as an intermediary will probably have bought them for 180 or 190, their, the broker's bid, or buying price.

So in answer to your question the single prices listed are the seller's offer or selling price. What they were offering them for.

Whereas as a seller you'd only get their bid, or buying price.

Comparing the bid and offer prices on some equivalent current shares should give an idea of a typical spread percentage for that sector. Sectors with a high turnover and volume such as banking will probably have a smaller spread than shares which are traded less often.

So if you deduct this percentage from the reported current price, on the day this will give an average bid price, what a broker would have offered for them, again on the day.

michael adams

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[Sam Thatch]

Not with shares, that's currency transactions.

[Chris Hogg]

Thanks. Yes, I got it wrong in my reply to TNP. I should have said they were the offer prices.

[michael adams]

The single figure is known as the closing price. The price the shares made on the last bargains struck on that day, at the highest offer price accepted by those investors who bought the shares. What they considered they're worth, in other words.

That's not to say that the brokers might not also have been buying the shares right up to the close at their own lower bid price. But they're buying the shares solely for resale, rather than on their merits and at a price which includes a margin to cover at least some of their costs. So at a price less than they'd be worth to investors.

Unless there's a very large sum involved, just so long as you can show you've done a bit of research - rather than pluck figures out of the air, there shouldn't be any problem as far as I can see.

michael adams

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[Brian-Gaff]

I thought for a while we all owned most of Lloyds, can you own bits twice? Brian

[Huge]

The Bid/Offer spread is irrelevant in this case. HMRC want something called the "quarter-up" value;

Using the "High" and "Low" quotes for the day the deceased died, work out one-quarter of the difference between the two figures and add it to the "Low" figure. The equation is: Low+(High-Low)/4. e.g. If High = 120 and Low = 115 the the valuation figure is 115+(120-115)/4, which is 115+5/4 which equals 116.25.

[The Natural Philosopher]

They didnt when me mum died

[Chris Hogg]

Yes, I've seen that explained elsewhere, except it was described as the difference between the bid and offer figures ('Which' guide to Wills and Probate, 2001 edition, p.49). The problem I'm having with it is in finding the numbers. Many lists quote closing prices for the day, but I've yet to find bid/offer figures. It's not as though the relative died very long ago, last Sunday in fact. The sum involved is not a lot, ~£100, so HMRC may not be too bothered as long as the value is somewhere about right.

[Chris Hogg]

Further to the above, another reference tells me that two methods are used together: the 'quarter up', just as you've described it, and the 'mid-bargain price' which is the average of the highest and lowest marked bargain prices for the day in question. The lower of the two figures is then used.(FT Guide to Inheritance Tax, Probate and Estate Planning, Prentice Hall, 2010).

In principle, simple, but where to get the numbers?!