Ch1QBusi538.pdf - Assignment Print View 1 of 10 https/ezto.mheducation.com/hm.tpx?todo=printview 11:13 PM Assignment Print View 2 of 10

# Ch1QBusi538.pdf - Assignment Print View 1 of 10...

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Assignment Print View 1 of 10 11/10/2019, 11:13 PM
Consider the following limit order book for a share of stock. The last trade in the stock occurred at a price of \$50. Limit Buy Orders Limit Sell Orders Price Shares Price Shares \$49.75 500 \$50.25 100 49.50 800 51.50 100 49.25 500 54.75 300 49.00 200 58.25 100 48.50 600 a. If a market buy order for 100 shares comes in, at what price will it be filled? (Round your answer to 2 decimal places.) Best price \$ 50.25 b. At what price would the next market buy order be filled? (Round your answer to 2 decimal places.) Next best price \$ 51.50 c. If you were a security dealer, would you want to increase or decrease your inventory of this stock? Increase Consider the following limit order book for a share of stock. The last trade in the stock occurred at a price of \$50. Limit Buy Orders Limit Sell Orders Price Shares Price Shares \$49.75 500 \$50.25 100 49.50 800 51.50 100 49.25 500 54.75 300 49.00 200 58.25 100 48.50 600 a. If a market buy order for 100 shares comes in, at what price will it be filled? (Round your answer to 2 decimal places.) Assignment Print View 2 of 10 11/10/2019, 11:13 PM
Best price \$ 50.25 b. At what price would the next market buy order be filled? (Round your answer to 2 decimal places.) Next best price \$ 51.50 c. If you were a security dealer, would you want to increase or decrease your inventory of this stock? Increase a. The market-buy order will be filled at \$50.25, the best price of limit-sell orders in the book. b. The next market-buy order will be filled at \$51.50, the next-best limit-sell order price. c. As a security dealer, you would want to increase your inventory. There is considerable buying demand at prices just below \$50, indicating that downside risk is limited. In contrast, limit-sell orders are sparse, indicating that a moderate buy order could result in a substantial price increase. A market order has: Price uncertainty but not execution uncertainty. A market order has: Price uncertainty but not execution uncertainty. Assignment Print View 3 of 10 11/10/2019, 11:13 PM
Suppose you short-sell 100 shares of IBX, now selling at \$200 per share. a. What is your maximum possible loss? The maximum possible loss is unlimited b. What happens to the maximum loss if you simultaneously place a stop-buy order at \$210? (Input the amount as a positive value.) The maximum possible loss is now \$ 1,000 Suppose you short-sell 100 shares of IBX, now selling at \$200 per share.

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