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...

This preview shows page 1 - 5 out of 10 pages.

Assignment Print View 1 of 10 11/10/2019, 11:13 PM
Image of page 1
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
Image of page 2
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
Image of page 3
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.
Image of page 4
Image of page 5

You've reached the end of your free preview.

Want to read all 10 pages?

  • Winter '18
  • TBD

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask ( soon) You can ask (will expire )
Answers in as fast as 15 minutes
A+ icon
Ask Expert Tutors