Legal Definitions - closing price

The closing price refers to the final price at which a financial asset, such as a stock, bond, or commodity, is traded at the very end of a specific trading day on a market exchange. It represents the last agreed-upon value before the market officially closes for that day, and it is often used as a benchmark for daily performance and valuation.

• Example 1 (Stock Market Investor): An individual investor owns shares of "Green Energy Solutions Inc." On a Tuesday afternoon, after the stock market has closed, they check their brokerage account. The platform displays that Green Energy Solutions Inc. stock finished the day at $125.75 per share.

  How it illustrates the term: This $125.75 is the closing price because it represents the final transaction price recorded for Green Energy Solutions Inc. stock before the stock market officially ceased trading for that Tuesday. This price is crucial for calculating the investor's portfolio value and daily gains or losses.

• Example 2 (Commodity Futures Trader): A professional trader specializes in precious metals. On a Thursday, they are closely monitoring the price of gold futures contracts on the COMEX exchange. As the market approaches its official closing time, the last trade for the nearest-month gold future is executed at $2,350.50 per ounce.

  How it illustrates the term: The $2,350.50 per ounce is the closing price for that specific gold futures contract on Thursday. This final price is used to determine the daily settlement for all traders holding those contracts and serves as the benchmark for the next day's opening trade.

• Example 3 (Mutual Fund Valuation): A large mutual fund holds a diverse portfolio of publicly traded corporate bonds. At the end of each business day, the fund's administrator calculates the fund's Net Asset Value (NAV) per share, which reflects the value of all assets held by the fund. To do this accurately, they must value each bond in the portfolio.

  How it illustrates the term: The administrator uses the closing price for each corporate bond in the fund's portfolio—meaning the last traded price for each bond on its respective exchange before market close—to determine the total value of the fund's assets and, consequently, its daily NAV per share.