### Order Book Analysis for an AssetThe order book for an asset is presented below:| BID | VOL | ASK | VOL ||---------|-----|--------|-----|| 537.04 | 200 | 537.10 | 200 || 537.00 | 300 | 537.11 | 100 || 536.93 | 500 | 537.15 | 400 |A limit sell order arrives for 500 units at $537.00. Assuming partial execution is possible, what is the transaction price?#### Available Options:1. None of these2. 200 units for $537.04 and 300 for $537.003. *200 units for $537.10, 100 for $537.11 and 200 for $537.15*4. 500 units for $537.00In this scenario, the correct transaction involves partial execution:- 200 units are sold for $537.10,- 100 units for $537.11,- 200 units for $537.15. This option reflects that the selling price involves using the current best available ask prices incrementally, as the sell order fills the available volumes.

An Order book consists of a list of open orders from different buyers and sellers for the underlying…

Answered: The order book for an asset is given…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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### Order Book Analysis for an Asset

The order book for an asset is presented below:

| BID | VOL | ASK | VOL |
|---------|-----|--------|-----|
| 537.04 | 200 | 537.10 | 200 |
| 537.00 | 300 | 537.11 | 100 |
| 536.93 | 500 | 537.15 | 400 |

A limit sell order arrives for 500 units at $537.00. Assuming partial execution is possible, what is the transaction price?

#### Available Options:
1. None of these
2. 200 units for $537.04 and 300 for $537.00
3. *200 units for $537.10, 100 for $537.11 and 200 for $537.15*
4. 500 units for $537.00

In this scenario, the correct transaction involves partial execution:

- 200 units are sold for $537.10,
- 100 units for $537.11,
- 200 units for $537.15.

This option reflects that the selling price involves using the current best available ask prices incrementally, as the sell order fills the available volumes.

Expert Solution

Introduction

An Order book consists of a list of open orders from different buyers and sellers for the underlying security.
It includes bid price and ask price, bid price means purchase price and ask price means selling price.
Investors can use order book for technical analysis before buying the securities. It indicates whether investors are bullish or bearish towards that particular security.

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