What is the stock\'s opening price given the information below about orders that
ID: 2781491 • Letter: W
Question
What is the stock's opening price given the information below about orders that arrived overnight? Please show your work.
Buy orders:
200 shares at the market price;
400 shares at $15.90;
300 shares at $15.89;
400 shares at $15.88;
300 shares at $15.87;
250 shares at $15.86;
Sell orders:
350 shares at the market price;
500 shares at $15.85;
700 shares at $15.86;
no orders at $15.87;
150 shares at $15.88;
800 shares at $15.89;
100 shares at $15.90.
A. $15.87
B. $15.88
C. $15.85
D. $15.89
E. $15.86
Explanation / Answer
As per order execution priority and Opening Cross, the first priority is given to order Bid-Ask matching for limit orders and for finding a price at which maximum number of shares can trade at a single price
Trade Price Number of Buy Shares Number of Sell Shares Trade Possible Quantity
15.85 1850 850 850
15.86 1850 1550 1550
15.87 1600 1550 1550
15.88 1300 1700 1300
15.89 900 2500 900
So, the maximum liquidity is provided at price of $15.86
Hence, Option-(e) is correct
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