Question

Consider the follow order be are limit orders away from the market. How order book exists for a particular stock." per share. particular stock. That is, these the market". The stock last traded at $56.64 Buy Orders Sell Orders Shares 250 600 900 1200 Price $55.50 $55.40 $55.30 $55.20 Shares Price 100 $65.60 500 $55.70 750 $55.80 800 $55.90 15. If you put in a market order to buy 400 shares of stock, what wit be the total cost of the transaction? Your broker charges you $35 per transaction. A. Less than $22,100 B. $22,100 to $22,200 C. $22,200 to $22,300 D. $22,300 to $22,400 E. More than $22,400 16. If you put in a market order to sell 400 shares of stock, what will be the total credit to your account? Your broker charges you $35 per transaction. - A. Less than $22,100 B. $22,100 to $22,200 C. $22,200 to $22,300 D. $22,300 to $22.400 E. More than $22,400

Answer 1

15]

The market order will be executed as follows :

• 100 shares at the best ask price of $55.60. Total amount = 100 * $55.60 = $5560.
• 300 shares at the next best ask price of $55.70.  Total amount = 300 * $55.70 = $16710.

Total amount (before brokerage) = $5560 + $16710 = $22270.

Total amount (after brokerage) = $22270 + $35 = $22305.

The answer is D.

16]

The market order will be executed as follows :

• 250 shares at the best bid price of $55.50. Total amount = 250 * $55.50 = $13875.
• 150 shares at the next best bid price of $55.40.  Total amount = 150 * $55.40 = $8310.

Total amount (before brokerage) = $13875 + $8310 = $22185.

Total amount (after brokerage) = $22185 - $35 = $22150.

The answer is B.