The formula's above are required to solve the problem

1. An investor has an order for 1,000,000 shares of stock RLK and the market impact cost of the order is $50,000 dollars which is 50 basis points (bp).

1. If the investor doubles the order to 2,000,000 shares of RLK, estimate the market impact cost both in dollars and in basis points for the new order of 2,000,000 shares.

2. If the investor reduces the order to 500,000 shares of RLK, estimate the market impact cost both in dollars and basis points for the new order of 500,000 shares.

3. Show a graph illustrating how you determined your answer.

Mlbp = b Ibp POV04 + (1 b) Ivp 1 1 Shares 1 POV TR=0 . 10% 250 3 ADV POV a2 Shares = 01 - Share 023 Shares Size ADV Shares POV = Shares + Time ADV 1 - POV Time = Size POV Mlbp = b Ibp POV04 + (1 b) Ivp 1 1 Shares 1 POV TR=0 . 10% 250 3 ADV POV a2 Shares = 01 - Share 023 Shares Size ADV Shares POV = Shares + Time ADV 1 - POV Time = Size POV