$ \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 limit order arrives to buy 1000 shares at $1.05.At what price will the trade occur? (Assume no new orders arrive after the limit order. )

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 limit order arrives to buy 1000 shares at $1.05.At what price will the trade occur? (Assume no new orders arrive after the limit order. )

Quizplus · Accepted Answer

A limit order to buy is used to purchase shares at a specific price.However,the transaction will only proceed if there are sufficient shares available at the required price.In this case,there are no traders willing to sell at a price of $1.05 (the lowest available selling price is $1.10),and hence the trade will not take place.Instead,the limit order will be placed on the order book as a price (to buy)of $1.05 for a quantity (to buy)of 1000 shares.No trade will take place at this point in time.

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