Question
Please explain why you chose your answers Instruction: - The solution to each question should include detailed calculation steps and (or) explain why you choose
Please explain why you chose your answers
Instruction: - The solution to each question should include detailed calculation steps and (or) explain why you choose that answer. No any step means ZERO point.
2. Consider the following limit-order book of a market-maker. The last trade in the stock took place 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?
b. At what price would the next market-buy order be filled?
c. If you were the specialist, would you desire to increase or decrease your inventory of this stock?
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