2. (20pt) Consider the following limit-order book for a stock. If a trader submits a market ask order for 1,500 shares, what is the average price at which his order is executed? Bid Ask Price Shares Price Shares $49.75 500 $50.25 100 $49.50 800 $51.50 100 $49.25 500 $54.75 300 $49.00 200 $58.25 100
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First, the trader's market ask order for 1,500 shares will be filled starting from the highest bid price. Show more…
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A firm PM puts a buy order to purchase 35,100 shares of Intuitive Surgical (ISRG) stock with the following timeline: ISRG stock price closes at $405.23 per share. Day one: PM places a limit order for 35,100 shares of ISRG stock at $407.25 per share or better at the opening of trading. ISRG's stock never falls below $407.26 per share and closes at $415.39 per share. Day two: PM adjusts her limit order price to $416.75 per share or better. PM is able to buy 28,450 shares of the order at $416.75 per share. ISRG's stock continues to climb to $423.62 per share during the day and the PM moves the limit price to $424.00 per share or better. The order is completed with 6,650 shares of ISRG at $424.00 per share, which is also the closing price of ISRG's stock. The commission paid for each block trade is $22,500. The total implementation shortfall for the ISRG trade is closest to:
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