Question
Suppose 1,000 shares of Acme Co. stock are ordered to be bought on Monday with a benchmark price of $10.00. On Monday, 600 shares are
Suppose 1,000 shares of Acme Co. stock are ordered to be bought on Monday with a benchmark price of $10.00. On Monday, 600 shares are purchased at $10.02 per share. Commissions and fees are $20. On Tuesday, the benchmark price has fallen to $9.99 per share. On Tuesday, 100 more shares are purchased at $10.08 per share. Commissions and fees are $12. Shares for Acme close on Tuesday at $10.01 per share. The remaining shares are not purchased, and the order is cancelled on Wednesday just as the market closes at $10.05 per share. A. Calculate the implementation shortfall for this trade. B. Calculate the components of the implementation shortfall for this trade.
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