You are a market-maker working at a large broker-dealer in the FX spot market. You are responsible for making a market in the AUD vs. the USD. Suppose a customer sells you an abnormally large quantity of AUD. How would you adjust your quotes to attract offsetting order-flow to decrease your net position in this market? Answer with respect to bids and asks for the spot rate that is directly quoting for AUD. You would decrease both your bid price and your ask price for S(USD/AUD). You would decrease your bid price and increase your ask price for S(USD/AUD). O You would increase your bid price and decrease your ask price for S(USD/AUD). You would increase both your bid price and your ask price for S(USD/AUD). None of the other answers.

Which of the following statements is most accurate?   A stop-sell order is placed by a bullish investor above the current market price. A stop-buy order is placed by a bearish investor above the current market price. A stop-sell order is placed by a bearish investor below the current market price. A stop-sell order is placed by a bullish investor at the current market price. A stop-sell order is placed by a bearish investor at the current market price.

In an efficient market, the price of a security will: Multiple Choice   always rise immediately upon the release of new information with no further price adjustments related to that information.   react to new information over a two-day period after which time no further price adjustments related to that information will occur.   rise sharply when new information is first released and then decline to a new stable level by the following day.   react immediately to new information with no further price adjustments related to that information.

What is correct option and incorrect option with explanation please without plagiarism please Introduction and explanation and final answer required please

You recently found out that when the market is in recession, ALL assets seem to suffer from some degree of liquidity problems as there are less trades than usual, and thus it is hard to sell an asset without losing some of its fair value. So, you concluded that at least some portion of liquidity risk must be systematic in nature and therefore it must be compensated by the market. To verify this, you cut the market portfolio in half by the illiquidity measure developed by Amihud (2002) [So that you have one relatively liquid portfolio and one relatively illiquid portfolio. Assume that this measure is reliable.] and calculated the market liquidity risk premium as follows: Market liquidity risk premium = Expected return on the illiquid portfolio - Expected return on the liquid portfolio = [E(RIL) - E(RL)] Then you formed 5 portfolios from the entire market based on liquidity (Amihud measure) and estimate the factor loading β (called liquidity beta) of each portfolio using [RIL - RL] as…

Behavioural finance is arguably most useful in explaining asset prices when there are significant numbers of “noise traders” and limits to arbitrage. Why is this so?

Markets are efficient when prices adjust rapidly to new information, continuous markets exist, and large dollar trades can be absorbed without large price movements. True or False

Organized exchanges offer important advantages like (a) mitigating credit risk and (b) providing liquidity. But they have the following market imperfections: 1. Open interest in futures contracts declines for longer maturities; so, for liquidity reasons, you may be unable to hedge longer deliveries using longer maturity futures contracts. Explain briefly how you would overcome these market imperfections.