Question

You find the following order book on a particular stock. The last trade on the stock was at $66.76.

Buy Orders				Sell Orders
Shares		Price		Shares		Price
250		$66.75		250		$66.78
500		66.74		650		66.79
900		66.73		1,000		66.81
275		66.71		300		66.82
				100		66.83

a. If you place a market buy order for 200 shares, at what price will it be filled? (Round your answer to 2 decimal places.)

	Share price

b. If you place a market sell order for 200 shares, at what price will it be filled? (Round your answer to 2 decimal places.)

	Share price

c. Suppose you place a market order to buy 500 shares. At what price will it be filled? Choose the appropriate answer.

• 500 shares at $66.76

• 250 shares at $66.78 and 250 shares at $66.79

• 500 shares at $66.83

• 250 shares at $66.83 and 250 shares at $66.82

Answer 1

A) When we place a market buy order, it will be fulfilled at the best price sellers available in the market.In this orderbook the seller is available at $ 66.78.

So it will be fulfilled at $ 66.78

B) When we place a market sell order, it will be fulfilled at the best price buyers available in the market.In this orderbook the buyer is available at $ 66.75.

So it will be fulfilled at $ 66.75.

C) When the market order is placed for 500 shares, it will be executed 250 shares at $66.78 and 250 at $ 66.79.

So 2nd option is the correct answer.