$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$ \quad $$\text { ABC Limited: Order book }$
$\begin{array}{l}
\begin{array}{|c|c|r|r|}
\hline \begin{array}{c}
\text { Price } \
\text { (to buy) }
\end{array} & \begin{array}{c}
\text { Quantity } \
\text { (to buy) }
\end{array} & \begin{array}{c}
\text { Price } \
\text { (to sell) }
\end{array} & \begin{array}{c}
\text { Quantity } \
\text { (to sell) }
\end{array} \
\hline \$ 1.00 & 50000 & \$ 1.10 & 25000 \
\hline \$ 0.90 & 25000 & \$ 1.20 & 50000 \
\hline \$ 0.80 & 50000 & \$ 1.30 & 100000 \
\hline
\end{array}
\end{array}$
-Given the order book for ABC Limited,suppose a market order arrives to buy 80,000 shares.At what price will the trade occur?

Question

$  \quad $$  \quad $$  \quad $$  \quad $$  \quad $$  \quad $$  \quad $$\text { ABC Limited: Order book }$
$\begin{array}{l}
\begin{array}{|c|c|r|r|}
\hline \begin{array}{c}
\text { Price } \
\text { (to buy) }
\end{array} & \begin{array}{c}
\text { Quantity } \
\text { (to buy) }
\end{array} & \begin{array}{c}
\text { Price } \
\text { (to sell) }
\end{array} & \begin{array}{c}
\text { Quantity } \
\text { (to sell) }
\end{array} \
\hline \$ 1.00 & 50000 & \$ 1.10 & 25000 \
\hline \$ 0.90 & 25000 & \$ 1.20 & 50000 \
\hline \$ 0.80 & 50000 & \$ 1.30 & 100000 \
\hline
\end{array}
\end{array}$
-Given the order book for ABC Limited,suppose a market order arrives to buy 80,000 shares.At what price will the trade occur?

Quizplus · Accepted Answer

A market order to buy shares will occur at the lowest available selling price in the order book.This price is $1.10;given that there are insufficient shares available at that price (i.e.25 000 and 80 000 shares are required to fill the order),25 000 shares will trade at the price of $1.10.The next 50 000 shares will be bought at $1.20 and the last 5 000 shares at $1.30.

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