Consider the following limit order book for Fin Trade stock. The last trade in the stock occurred at a price of $50. Limit Buy Orders(Bid) Limit Sell Orders(Ask) Price Shares Price Shares $ 49.75 100 $ 49.80 400 49.70 200 49.85 900 49.65 100 49.90 300 49.60 200 49.95 600 48.65 250 50.05 900 a. If a market sell order for 150 shares comes in, will it be filled immediately? At what price will it be filled? If not, please describe the situation and explain why. (Round your answer to 2 decimal places.) b. If a limit sell order for 150 shares at the price of 49.78 comes in, will it be filled immediately? At what price will it be filled? If not, please describe the situation and explain why. (Round your answer to 2 decimal places.) c. Based on the current order book structure, Bill expects the stock price will go down. Is it a reasonable expectation? Explain why. d. Suppose a moderate volume of market buy order or a market sell order having the same size comes in, which one do you think will cause a larger stock price change? Explain why.
Consider the following limit order book for Fin Trade stock. The last trade in the stock occurred at a price of $50. Limit Buy Orders(Bid) Limit Sell Orders(Ask) Price Shares Price Shares $ 49.75 100 $ 49.80 400 49.70 200 49.85 900 49.65 100 49.90 300 49.60 200 49.95 600 48.65 250 50.05 900 a. If a market sell order for 150 shares comes in, will it be filled immediately? At what price will it be filled? If not, please describe the situation and explain why. (Round your answer to 2 decimal places.) b. If a limit sell order for 150 shares at the price of 49.78 comes in, will it be filled immediately? At what price will it be filled? If not, please describe the situation and explain why. (Round your answer to 2 decimal places.) c. Based on the current order book structure, Bill expects the stock price will go down. Is it a reasonable expectation? Explain why. d. Suppose a moderate volume of market buy order or a market sell order having the same size comes in, which one do you think will cause a larger stock price change? Explain why.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
am. 106.
Transcribed Image Text:Consider the following limit order book for Fin Trade stock. The last trade in the stock
occurred at a price of $50.
Limit Buy Orders(Bid)
Limit Sell Orders(Ask)
Price
Shares
Price
Shares
$ 49.75
100
$ 49.80
400
49.70
200
49.85
900
49.65
100
49.90
300
49.60
200
49.95
600
48.65
250
50.05
900
a. If a market sell order for 150 shares comes in, will it be filled immediately? At what
price will it be filled? If not, please describe the situation and explain why. (Round your
answer to 2 decimal places.)
b. If a limit sell order for 150 shares at the price of 49.78 comes in, will it be filled
immediately? At what price will it be filled? If not, please describe the situation and
explain why. (Round your answer to 2 decimal places.)
c. Based on the current order book structure, Bill expects the stock price will go down.
Is it a reasonable expectation? Explain why.
d. Suppose a moderate volume of market buy order or a market sell order
having the same size comes in, which one do you think will cause a larger stock
price change? Explain why.
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