Question

Part A:

You find the following order book on a particular stock. The last trade on the stock was at $42.34.

Buy Orders				Sell Orders
Shares		Price		Shares		Price
250		$42.33		100		$42.36
400		42.32		350		42.37
900		42.31		1,000		42.39
225		42.29		200		42.40
				300		42.41

a. If you place a market buy order for 100 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:

PART 2:

Assume the following information concerning two stocks that make up an index. What is the price-weighted return for the index? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

					Price per Share
	Shares Outstanding				Beginning of Year				End of Year
Kirk, Inc.		33,000			$	45			$	50
Picard Co.		31,500				75				81
RETURN:

Answer 1

a.

If you want to buy 100 shares at the market price then you will get shares at the price at which someone wants to sell(lowest of all) so you will get 100 shares at $42.36. As it is the lowest price at which all these 100 shares are available that's why you are getting at $42.36.

b.

If you want to sell 200 shares, you will be able to sell at price(highest price) at which people want to buy. So you will sell it at $42.33.

Part 2

As we know that the price weighted index is given by

Sum of Members Stock Price / No of Members

So for Begining of year index would be at

= 45 + 75 / 2

= 60

and at end of year it would be at

= 50 + 81 / 2 =

= 65.5

Now return on index is = 5.5/60 * 100

= 9.1667%

=9.17%