Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Chapter 1, Problem 19P

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

  • Limit Order: Buy 200 shares at $25
  • Limit Order: Sell 200 shares at $26
  • Limit Order: Sell 100 shares at $25.50
  • Limit Order: Buy 100 shares at $25.25
  1. a. What are the best bid and ask prices for Cisco stock?
  2. b. What is the current bid-ask spread for Cisco stock?
  3. c. Suppose a market order arrives to buy 200 shares of Cisco. What average price will the buyer pay?
  4. 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?
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