Question

What is the stocks opening price given the information below about orders accumulated before the market open?

Buy orders:
300 shares at the market price
400 shares at $38.40
350 shares at $38.39
600 shares at $38.38
500 shares at $38.37
500 shares at $38.36

Sell orders:
250 shares at the market price
500 shares at $38.35
400 shares at $38.36
500 shares at $38.37
150 shares at $38.38
800 shares at $38.39

A. $38.39

B. $38.38

C. $38.37

D. $38.36

E. $38.35

Answer 1

In a stock market, the best buy order meets the best sell order and the transaction is executed.

Best buy is the item or product which gives the best value.

Best sell is the lowest price quoted.

In the given situation, best buy price is 38.40 but since no trader is willing to sell at this price therefore, best buy becomes 38.39$. Since at this price the maximum no of shares which can be transacted is 350 therefore the opening price is $38.39 and the no of shares are 350