Suppose the following orders are received by an exchange for Cisco stock:

Limit Order: Buy

200

shares at $24.95

Limit Order: Sell

200

shares at $25.55

Limit Order: Sell

100

shares at $25.35

Limit Order: Buy

100

shares at $25.15

a. What are the best bid and ask prices for Cisco stock?

b. What is the current bid-ask spread for Cisco stock?

c. Suppose a market order arrives to buy 200 shares of Cisco. What average price will the buyer pay?

d. After the market order in (c) clears, what are the new best bid and ask prices, and what is the new bid-ask spread for Cisco?

A.

The best bid price is: Limit Order: Buy

100

shares at

$25.15;

while the best ask price is: Limit Order: Sell

100

shares at

$25.35.

B.

The best bid price is: Limit Order: Buy

200

shares at

$24.95;

while the best ask price is: Limit Order: Sell

100

shares at

$25.35.

C.

The best bid price is: Limit Order: Buy

100

shares at

$25.15;

while the best ask price is: Limit Order: Sell

200

shares at

$25.55.

D.

The best bid price is: Limit Order: Sell

100

shares at

$25.35;

while the best ask price is: Limit Order: Buy

100

shares at

$25.15.