In a report dated December 15, 2004, the Office of Economic Analysis of the U.S.

Securities and Exchange Commission (SEC) compared trade execution quality on the

NYSE and NASDAQ using a matched sample of 113 pairs of firms. The comparison is

based on six months of data from January to June 2004. The results regarding which

market has the better execution quality (NYSE or NASDAQ) vary across order size, firm

size, and order type. The results below are for small market orders (100499 shares) in

shares of large market capitalization firms.

Spread (cents) NASDAQ NYSE

Quoted spread 2.737 2.791

Effective spread 2.650 2.490

Source: Office of Economic Analysis, SEC, December 15, 2004.

On the basis of the above results, address the following:

A. Determine whether dealers in NASDAQ shares and dealers (specialists) in NYSE

shares in the particular market being discussed provided price improvements.

B. Contrast the relative performance of dealers in the two markets with regard to any

price improvements.