Homework Answers
A buy-market order is executed at the best ask price (lowest price at which any trader is willing to sell) which is 60 dollars, Hence the best bid price (highest price at which any trader is ready to buy) should be $59 (because of $1 spread)
a) A limit-sell order of 60.5 will not be immediately executed. It will be executed only if some trader is willing to buy at 60.5 dollars during the day. If it is executed, it will be executed at 60.5 dollars.
b) A limit-buy order of 59.5 will not be immediately executed. It will be executed only if some trader is willing to sell at 59.5 dollars during the day. If it is executed, it will be executed at 59.5 dollars
c) A market sell order will be executed immediately and matched with the best bid price. Thus, it will be executed at 59 dollars.
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