Question

Visibility Hidden The following orders arrive at the floor of an exchange Time Type Price Size 9.31 Buy 30.10 100 9.32 Buy 30.11. 200 933 Sell 30.14 250 9.34 Sell Market 400 9.34 Sell 30.13 200 9.35 Buy 30.12 200 9.35 Buy 30.12 250 Trader Bob Ben Sam Sue Sally Bif Barry Hidden hidden a. What is the bid price and ask price at 9.34 am? (20 pts) b. Describe whether or not a trade can be executed at 9.34 am? If so, list the trades. Identify the names of the buyers and sellers, the price and quantity each trader receives or pays. (40 pts) c. Describe whether or not a trade can be executed at 9.35 am? If so, list the trades. Identify the names of the buyers and sellers, the price and quantity cach trader receives or pays. (40 pts)

Answer 1

Solution :

a.) What is the bid price and ask price at 9.34 am?

Ans : At 9.34 am there are two orders lined up. One order is at the ask price of market value for 400 quantity and other is at the ask price of 30.13 for 200 quantity. At 9.31 am and 9.32 am there are orders of buy with bid price at 30.10 and 30.11 for quantity 100 and 200 respectively. It is obvious that at 9.34 am, the order will be executed for 300 quantity (100+200) with the ask price at market and bid price at 30.10 for 100 quantity and 30.11 for 200 quantity.

b.) Describe whether or not a trade can be executed at 9.34 am? If so, list the trades. Identify the names of the buyers and sellers, the price and quantity each trader receives or pays?

Ans : Yes. Based on explanation given in a.) the below trade will be executed.

Time	Purchaser	Qty	Bid Price		Seller	Qty	Ask Price
9.34 am	Bob	100	30.10		Sue	100	Market
9.34 am	Ben	200	30.11		Sue	200	Market

c.) Describe whether or not a trade can be executed at 9.35 am? If so, list the trades. Identify the names of the buyers and sellers, the price and quantity each trader receives or pays?

Ans : Yes. After the execution of trade at 9.34 am. There is still 100 quantity of Sue balance for execution at market price. The following trade will be executed at 9.35 am.

Time	Purchaser	Qty	Bid Price		Seller	Qty	Ask Price
9.35 am	Bif	100	30.12		Sue	100	Market