Double checking these to see if the answer circled is correct or not. Use the fo

Question

Double checking these to see if the answer circled is correct or not.

Use the following information for the next 3 questions. Here is an NYSE specialist's limit-order book in a hypothetical stock; the current 28.87/29.12. bid/ask spread is Buy Orders Price $28.75 28.62 28.50 shares- 100 200 100 Limit-Sell Orders Price 29.25 29.37 29.50 29.75 eshares 900 700 600 19. If a market sell order for 100 shares comes in. it will be filled at- a) $2925 ) 129.12 c) 28.87 d) 28.75 sell order for 400 shares comes in, and the specialist buvs 200 of those shares, the fourth round lot will be filled at a)) $28.62 b) 29.25 c) 28.50 d) 28.75 21. Assuming random order-flow, the specialist is motivated to take a inventory position in the near future. this stock, at this time, because its price is more likely toin a) long, decrease b) short, increase ) long, increase d) short, decrease

Explanation / Answer

Current bid/ask spread is 28.87/29.12

Current Bid price = 28.87, ask price = 29.12

Bid - wants to buy, ask - wants to sell.

1) if a market sell order for 100 shares is placed, then it will be filled at the current Bid price 28.87

Because market orders will be executed at the current market price.

2) If a market sell order for 400 shares is placed, first 200 will be filled at the current Bid price $28.87 and the remaining 200 shares filled by the limit order book from specialist

By following first -in -first out his limit buy order book, 100 at $28,75, and other 100 at $28.62,

Round lot = 100 shares, hence the forth round will be executed at $28.62.

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