Question

Consider the following limit order book for a share of stock. The last trade in the stock occurred at a price of $49.50. Limit Buy Orders Limit Sell Orders Price Shares Price Shares $49.30 500 $49.80 100 49.00 800 49.85 100 48.75 500 52.25 300 48.50 200 55.75 100 48.00 600 a. If a market buy order for 100 shares comes in, at what price will it be filled? b. At what price would the next market buy order be filled?

Answer 1

Incomplete question. The attached image shows the full question.

Answer:

$50.25; $51.50

Step-by-step explanation:

First, remember that a market order is one that is designed to execute a trade at the best possible market price.

This means that from the various sell orders, if a market buy order for 100 shares comes in, it will pair up with the best price (the lowest price ) from the list of sell orders. Hence, we could observe from the attached image that $50.25 is the first lowest sell order price for 100 shares; followed by $51.50.