Answer:
a) The price for a market buy order for 100 shares would be $50.25.
Being a market order, the buyer is going to purchase at whatever the seller is offering. Out of the 4 orders on the table, the price of $50.25 is the lowest and what the buyer is more likely to go for.
b) The next market order would be filled at $51.50
As a market order, the buyer is still left to purchase at what the seller is offering, being the cheapest offer in the marker. The buyer would more like proceed with this offer.
c) As a security dealer, I am more likely to increase my inventory in this stock because the limit buy order are trading less than $50 while the sell orders are above $50 which would mean that there is a narrow risk of actual return being less than expected i.e downside risk. Also since the limit sell orders are minor, there is a greater possibility that an increase in demand would result in increase in price.
Explanation:
a) If a market buy order for 100 shares comes in, the price it will be filled is $50, which represents the latest price per share.
b) The next buy order will be filled at $49.
c) Based on the limit sell order, I would want to decrease the inventory of this stock, especially if the stock price rises above $50 per share.
A limit order is a stock exchange market term that describes the order to buy or sell a stock, given the restriction imposed on the maximum price buying price or the minimum selling price.
Thus, filling an order can only happen at the specified limit price or better.
With a limit buy or sell order, there is no assurance of execution.
Limit Buy Orders Limit Sell Orders
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
48.50 600
Learn more about limit buy and sell orders at https://brainly.com/question/6768303
