MyLab Finance with Pearson eText -- Access Card -- for Corporate Finance (Myfinancelab)
4th Edition
ISBN: 9780134099170
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Textbook Question
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
- a. What are the best bid and ask prices for Cisco stock?
- b. What is the current bid-ask spread for Cisco stock?
- c. Suppose a market order arrives to buy 200 shares of Cisco. What average price will the buyer pay?
- 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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Suppose that the last sale of Company X stock was at a price of $50. Further suppose that an investor wishes to place a market order to purchase 25,000 shares of Company X stock. What is the volume weighted average price that the investor will trade at in each of the market? What if the investor purchase 120,000 shares instead 25,000?
Market Depth - Market A vs B
Market AMarket B#SharesOffer ($)#SharesOffer ($)30,00050.0010,00050.0040,00050.0210,00050.0110,00050.0570,00050.0320,00050.0680,00050.0430,00050.0760,00050.0510,00050.0940,00050.05
Consider the following limit order book of the stock on 13-Mar-2021
Limit Buy Orders
Limit Sell Orders
Price
Shares
Price
Shares
$38.00
100
$40.00
350
36
350
42
100
34
500
44
500
32
1,000
46
1,000
You use a market order buy 500 shares. Suppose you can then sell all the shares at the price of $48 in the following day. Which answer is the closest value to the rate of return on this investment?
A.
9%
B.
12%
C.
15%
D.
18%
You find the following order book on a particular stock. The last trade on the stock was at $66.76.
Buy Orders
Sell Orders
Shares
Price
Shares
Price
250
$66.75
250
$66.78
500
66.74
650
66.79
900
66.73
1,000
66.81
275
66.71
300
66.82
100
66.83
a. If you place a market buy order for 200 shares, at what price will it be filled? (Round your answer to 2 decimal places.)
b. If you place a market sell order for 200 shares, at what price will it be filled? (Round your answer to 2 decimal places.)
c. Suppose you place a market order to buy 500 shares. At what price will it be filled? Choose the appropriate answer.
multiple choice
500 shares at $66.83
250 shares at $66.78 and 250 shares at $66.79
250 shares at $66.83 and 250 shares at $66.82
500 shares at $66.76
Chapter 1 Solutions
MyLab Finance with Pearson eText -- Access Card -- for Corporate Finance (Myfinancelab)
Ch. 1.1 - Prob. 1CCCh. 1.1 - Prob. 2CCCh. 1.2 - Prob. 1CCCh. 1.2 - Prob. 2CCCh. 1.3 - What are the important changes that have occurred...Ch. 1.3 - What is the limit order book?Ch. 1.3 - Prob. 3CCCh. 1 - Prob. 1PCh. 1 - What does the phrase limited liability mean in a...Ch. 1 - Prob. 3P
Ch. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - You are a shareholder in a C corporation. The...Ch. 1 - Prob. 7PCh. 1 - Prob. 8PCh. 1 - Prob. 9PCh. 1 - Prob. 10PCh. 1 - Prob. 11PCh. 1 - Prob. 12PCh. 1 - Prob. 13PCh. 1 - Prob. 14PCh. 1 - Describe the important changes that have occurred...Ch. 1 - Prob. 16PCh. 1 - Explain how the bid-ask spread is determined in...Ch. 1 - Prob. 18PCh. 1 - Suppose the following orders are received by an...
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