Asked by Deandra Kirkland on Apr 28, 2024
Verified
Consider the following limit order book of a specialist. The last trade in the stock occurred at a price of $40. If a market buy order for 100 shares comes in, at what price will it be filled?
A) $39.75
B) $40.25
C) $40.375
D) $40.25 or less
Limit Order Book
A record of all open buy and sell orders for a specific security or asset, organized by price level.
Market Buy Order
An order to purchase a security immediately at the best available current price.
Last Trade
The most recent transaction that occurred for a specific security on a trading platform.
- Understand the fundamentals of stock trading, encompassing the functions and tactics of specialists as well as the principles of bid and ask prices.
Verified Answer
ZK
Zybrea KnightMay 04, 2024
Final Answer :
D
Explanation :
In this case the specialist would have the option of matching the buy order with the lowest limit sell order ($40.25) or setting an ask price lower than $40.25 ($40 for example) and trading the order from her own stock.
Learning Objectives
- Understand the fundamentals of stock trading, encompassing the functions and tactics of specialists as well as the principles of bid and ask prices.