Consider the following limit-order book for a share of stock. The last trade in

Question

Consider the following limit-order book for a share of stock. The last trade in the stock occurred at a price of $68 Limit Buy Limit Sell Orders Orders Price Shares Price Shares $67.75 500 68.25 200.00 67.50 300 68.50 300.00 67.25 500 71.75 300.00 67.00 300 75.25 100.00 66.50 1,000 a. If a market buy order for 200 shares comes in, at what price will it be filled? (Round your answer to 2 decimal plac Price b. At what price would the next market buy order be filled? (Round your answer to 2 decimal places.) Price

Explanation / Answer

a.

Correct option is > $68.25

Reason: A market order buy for 200 shares would first hit Limit sell orders, which is $68.25 and there are sufficient 200 quantities which is getting sold for $68.25

b.

Correct option is > $68.50

Reason: Immediate after buying at $68.25 we have sell orders limit at $68.50 for 300 shares. Hence, the next market buy order will be filled at $68.50

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