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At 9 : 0 0 am 1 0 th March 2 0 2 4 , your brokerage company receives an order from a client. This

At 9:00 am 10th March 2024, your brokerage company receives an order from a client. This client want to buy a 1,000 shares in Pear Inc (PEAR) and plans to hold these shares for 3 months until 10th June 2024. The midprice of PEAR is $170.73 when you receive the order, and the client expects its midprice to be $194.50 on 10th June 2024. In this illiquid market for PEAR shares, your company can only fulfill 70% of the total order size by 14th March with an average price of $179.7.
1. Calculate the execution cost, opportunity cost and implementation shortfall.
2. Let 12th March be the date at which the buy order begins to be executed, at the midprice of $174.89. Calculate the delay portion of the execution component of the implementation shortfall.
3. Consider another scenario where your company can fulfill 85% of the total order size by 14th March at an average price of $180.2. And another scenario where your company can fulfil 55% of the total order size at an average price of $179. Compare the implementation shortfalls in these three scenarios.

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