Question
The price of IBM will equal either 90 or 110 after an earnings announcement. You are a market maker and trade only with uninformed clients.
The price of IBM will equal either 90 or 110 after an earnings announcement. You are a market maker and trade only with uninformed clients. You have too much inventory of IBM and decide to skew your bid and offer prices downward. Specifically, your Bid is 97 and your offer is 101.
What is your expected profit if a client decides to buy from you?
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Data Analysis And Decision Making
Authors: Christian Albright, Wayne Winston, Christopher Zappe
4th Edition
538476125, 978-0538476126
