Question

The table below shows for different examples of stock orders at various

bid prices as they could appear in a market-makers limit order book. For each, determine whether the market is (a) deep or shallow, or (b) broad or thin.

__Number of shares ordered at each bid price_____

Bid Price Example 1 Example 2 Example 3 Example 4

$80	1200	1200	100	100
$79.95	1300	1300	50	150
$79.90	0	1400	0	200
$79.85	0	1500	0	225

Answer 1

Ex-1 Ex-2 Ex-3 Ex-4

$80 1200 1200 100 100

$79.95 1300 1300 50 150

$79.90 0 1400 0 200

$79.85 0 1500 0 225

The example - 1 is like a deep market but it is thin since the market order is only there for a couple of prices and then it is absent for lower prices

In example - 2, the market is a deep and broad market since market order is present across prices

Example - 3 is an example of a thin and shallow market

In Example - 4, we have a thin and a broad market.