(A) Adequate information Limit Buy orders Limit Sell orders Price Shares Price Shares $49.75 500 $49.80 100 49.70 900 49.85 100 49.65 700 49.90 300 49.60 400 49.95 100 48.65 600 To determine: The price at which the 100 shares of market buy order can be filled Introduction: Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

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Answer 1

Question

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

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Students have asked these similar questions

An investor purchases a stock for $38 and a put for $.50 with a strike price of $35. The investor sells a call for $.50 with a strike price of $40. What is the maximum profit and loss for this position? Draw the profit and loss diagram for this strategy as a function of the stock price at expiration.

An investor tells their broker to short 1,000 shares of a stock that is currently priced at $50. Is the investor betting that the price will go up or down in this scenario? Where do the shares for a short sale come from?

What about for these? (b) Suppose you have purchased some GameStop shares on margin at $5per share. You ask your broker to put in a limit sell order at $7, anda stop loss order at $4.50.i. What will happen if the stock price falls to $4.50?ii. What will happen if the stock price rises to $7?iii. Now suppose you had instead short-sold your GameStop shares(as in the first part of the question). What instructions mightyou give to your broker to minimise your losses and lock in yourgains?

Answer 2

Question

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Expert Solution & Answer

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Answer 5

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Answer 6

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Answer 7

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Answer 8

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Answer 9

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Answer 10

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Answer 11

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 3 - Prob. 1PS Ch. 3 - Prob. 2PS Ch. 3 - Prob. 3PS Ch. 3 - Prob. 4PS Ch. 3 - Prob. 5PS Ch. 3 - Prob. 6PS Ch. 3 - Prob. 7PS Ch. 3 - Prob. 8PS Ch. 3 - Prob. 9PS Ch. 3 - Prob. 10PS

Solution Summary: The author explains market order and limit order, and determines the price at which the 100 shares of market buy order can be filled.

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Chapter 3 Solutions

Limit Buy orders	Limit Sell orders
Price	Shares	Price	Shares
$49.75	500	$49.80	100
49.70	900	49.85	100
49.65	700	49.90	300
49.60	400	49.95	100
48.65	600