Problem 3: Suppose stock X trades on the New York Stock Exchange. Information from the limit order book (LOB) for stock X is contained below.

Limit buy orders Limit sell orders

Price Shares Price Shares

$ 80.10 1000 $81.00 1500

$ 80.18 700 $80.75 700

$ 80.30 500

Suppose the specialists quotes are as follows:

Bid price $80.30 Ask price $80.70

Bid depth 600 shares Ask depth 800 shares

1. What is the bid-ask spread?

2. For each of the following scenarios answer all the questions below: