Equity Investments Q50
0. For stock X, market has the following limit oders standing on its book:
| Buyer | Bid size(# ofshares) | Limit Price($ | Offer size(# of shares) | Seller |
| A | 900 | 9.70 | ||
| B | 100 | 9.84 | ||
| C | 300 | 9.89 | ||
| D | 200 | 10.02 | ||
| 10.03 | 700 | X | ||
| 10.11 | 1000 | Y | ||
| 10.16 | 300 | Z |
Dave submits a day order to sell 900 shares, limit $9.83. What would Dave’s average trade price be, assuming that no more buy orders are submitted on that day after Dave’s submission?
- Option : B
- Explanation : Dave’s average trade price is: $9.93 = (200 * $10.02 +300 * $9.89 +100 * $9.84) / (200 + 300 + 100) Dave’s sell order first fills with the most aggressively priced buy order, which is D’s order for 200 shares at $10.02. Dave still has 800 shares for sale. The next most aggressively priced buy order is C’s order for 300 shares at $9.89. This order is filled. Dave still has 500 shares for sale. The next most aggressively priced buy order is B’s order for 100 shares at $9.84. A third trade takes place. Dave still has 400 shares for sale. The next buy order is A’s order for 900 shares at $9.70. However, this price is below Dave’s limit price of $9.83. Therefore, no more trade is possible.
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