(A) Adequate information Limit Buy orders Limit Sell orders Price Shares Price Shares $49.75 500 $49.80 100 49.70 900 49.85 100 49.65 700 49.90 300 49.60 400 49.95 100 48.65 600 To determine: The price at which the 100 shares of market buy order can be filled Introduction: Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

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Answer 1

Question

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

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Students have asked these similar questions

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

An investor purchases a stock for $38 and a put for $.50 with a strike price of $35. The investor sells a call for $.50 with a strike price of $40. What is the maximum profit and loss for this position? Draw the profit and loss diagram for this strategy as a function of the stock price at expiration.

An investor tells their broker to short 1,000 shares of a stock that is currently priced at $50. Is the investor betting that the price will go up or down in this scenario? Where do the shares for a short sale come from?

Answer 2

Question

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Expert Solution & Answer

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Answer 3

Question

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Expert Solution & Answer

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See solution

Answer 4

Question

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Expert Solution & Answer

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Answer 5

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Answer 6

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Answer 7

Chapter 3, Problem 8PS

Summary Introduction

(A)

Adequate information

Limit Buy orders Limit Sell orders

Price Shares Price Shares

$49.75 500 $49.80 100

49.70 900 49.85 100

49.65 700 49.90 300

49.60 400 49.95 100

48.65 600

To determine:

The price at which the 100 shares of market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Answer 8

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Answer 9

Summary Introduction

(B)

To determine:

The price at which the 100 shares of next market buy order can be filled

Introduction:

Market order refers to the instruction provided by the investor to its broker to purchase or sell a particular stock at the price currently prevailing in the market. Market order can only be accepted by the broker when trading underlying a specific stock is active or during the market hours.

Answer 10

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Answer 11

Summary Introduction

(C)

To determine:

Whether the security dealer should be decrease or increase the inventory through the stock

Introduction:

Limit order refers to the instruction provided by an investor to a broker that includes a particular price at which the investor wants to purchase or sell a specific stock. Limit order enables the investor to select minimum price for the sell orders and maximum price for the buy order.

Answer 12

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Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 3 - Prob. 1PS Ch. 3 - Prob. 2PS Ch. 3 - Prob. 3PS Ch. 3 - Prob. 4PS Ch. 3 - Prob. 5PS Ch. 3 - Prob. 6PS Ch. 3 - Prob. 7PS Ch. 3 - Prob. 8PS Ch. 3 - Prob. 9PS Ch. 3 - Prob. 10PS

Solution Summary: The author explains market order and limit order, and determines the price at which the 100 shares of market buy order can be filled.

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Chapter 3 Solutions

Limit Buy orders	Limit Sell orders
Price	Shares	Price	Shares
$49.75	500	$49.80	100
49.70	900	49.85	100
49.65	700	49.90	300
49.60	400	49.95	100
48.65	600