Consider the following limit-order book of a specialist. The last trade in the stock took place at a price of $50.
|
Limit-Buy Orders |
Limit-Sell Orders |
||
|
Price ($) |
Shares |
Price ($) |
Shares |
|
49.75 |
500 |
50.25 |
100 |
|
49.50 |
800 |
51.50 |
100 |
|
49.25 |
500 |
54.75 |
300 |
|
49.00 |
200 |
58.25 |
100 |
|
48.50 |
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?
c. If you were the specialist, would you desire to increase or decrease your inventory of this stock?