Hey there,

Not too sure how to work out the dealers adverse selection for this question.

Any help would be greatly appreciated.

Thanks

Question 23 Answer the following question based on the following quote revisions of a dealer. Transaction time 1:02pm Dealer's quote Ask = 10.04 Bid = 10.01 Buyer 1 arrived and traded at $10.04 1:10pm Dealer's quote Ask = 10.05 Bid = 10.01 Seller 1 arrived and traded at $10.01 1:16pm Dealer's quote Ask = 10.04 Bid = 10.00 Buyer 2 arrived and traded at $10.04 Based on the information available, what is (the closest to) the dealer's average adverse selection component expressed as a proportion of the total spread? O a, 0% O b. 20.8% O c. 41.7% O d. 50.0% O e. None of the above