Question

You want to purchase 5 lots of stock AAA which is traded at Nasdaq. The market...

You want to purchase 5 lots of stock AAA which is traded at Nasdaq. The market price is given as as follows:

AA A Last Bid Ask

4.5 4.0 5.0

How much will you pay, ignoring the transaction fee?

$2500

$2000

$20

$25
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Answer #1

(A) $2500

REASON: The lot size of stock AAA traded at Nasdaq is 100 Shares.

In the given question there are 5 lots of stock AAA so therefore we have to buy 500 Shares (5 Lots*100 Shares)

Information

Last Rate:4.5

Bid Rate:4.0

Ask Rate:5.0

The Rate I will use for buying 500 shares will be Ask Rate(5.0) as this is the rate at which seller is ready to sell the stock AAA and it will be considered as offer Price for me as I will buy the stock or shares or lot.

The Amount I will pay ignoring the transaction fee will be

$2500(5 Lots*100 Shares*$5)

PLEASE UPVOTE IF YOU FIND THE SOLUTION HELPFUL.

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