Spring Aire is attempting to sell 600 shares of stock via a Dutch auction.The bids received were Bidder A,200 shares at $47; Bidder B,300 shares at $46; Bidder C,600 shares at $45; and Bidder D,500 shares at $43.How many shares will Bidder A be able to purchase?

Question

Quizplus · Accepted Answer

In a Dutch auction, the highest bidder gets the number of shares they bid for, but the price paid by each bidder is equal to the lowest winning bid. In this case, the lowest winning bid is $43, which means Bidder A's bid of $47 is too high to win any shares. Bidder B's bid of $46 is also too high, as Bidder C and Bidder D have bid lower and will win shares first. Bidder C will win 600 shares at a price of $43 each since they bid the highest number of shares at that price. Bidder D will win the next available shares, which is 500, at the same price of $43 each. This means there are only 100 shares left to be won, and Bidder A's bid of $47 is the highest among the remaining bidders. Therefore, Bidder A will win the remaining 100 shares at a price of $43 each, for a total of $4,300. Bidder A will be able to purchase 100 shares.

Spring Aire Is Attempting to Sell 600 Shares of Stock