Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Based on the below market depth information for HSU Corp. Price (S) Market Depth TISU Corp Bid Quantity Price (S) 26,000 3.71 29,000 3.70 42,500
Based on the below market depth information for HSU Corp. Price (S) Market Depth TISU Corp Bid Quantity Price (S) 26,000 3.71 29,000 3.70 42,500 3.65 10,700 3.65 8,500 3.64 3.74 3.76 Ask Quantity 39.000 33,500 28.200 21.700 11,500 3.77 3.78 Suppose you are a trader in a leading stock brokerage firm. A client has asked you to purchase 120,000 shares of HSU Corp. 2. (3 marks) What will be the average traded price if you decide to trade the entire order immediately? (assume no other transaction costs) b. (2 marks) Is there any market impact on this order? Explain. c. (2 marks) What will the market price be immediately following this trade? d. (2 marks) What alternative strategies may the trader employ in order to attempt to minimize this market impact? e. (2 marks) Suppose the VWAP for HSU Corp for that day was $3.765, how does your VWAP compare with the market VWAP
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started