Question

In: Finance

1. The Frankfurt Stock Exchange has accumulated the following overnight orders: Trader Order Quantity Price Bob...

1. The Frankfurt Stock Exchange has accumulated the following overnight orders:

Trader

Order

Quantity

Price

Bob

Buy

150

30

James

Buy

200

27

Amy

Buy

250

25

Julia

Buy

180

22

Sam

Buy

150

18

Sandy

Sell

190

17

Katrina

Sell

200

21

Jerry

Sell

220

25

Jack

Sell

150

27

The clearing price is set to maximize matched volume. The secondary criterion is to minimize net imbalance. What is the clearing price? What is the matched volume and net imbalance at that price? ( 55 points)

Solutions

Expert Solution

The situation clearly says that the clearing price should be set to maximize the matched volume. If you look at the order window, we can see that the maximum volume of trade can happen at a price of 25. Totally there are 3 bids for 600 units (250+200+150) at a price of 25 or above. Similarly there are 3 offers for 610 units(220+200+190) at a price of 25 or below. So at a price of 25 maximum trade can happen. The second criterion is to have minimum net imbalance. So, the clearing price is 25.

Matched volume at this price is 600.

The net imbalance volume is 600-610= -10.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

The Frankfurt Stock Exchange has accumulated the following overnight orders: Trader Order Quantity Price Bob Buy...
The Frankfurt Stock Exchange has accumulated the following overnight orders: Trader Order Quantity Price Bob Buy 150 30 James Buy 200 27 Amy Buy 250 25 Julia Buy 180 22 Sam Buy 150 18 Sandy Sell 190 17 Katrina Sell 200 21 Jerry Sell 220 25 Jack Sell 150 27 The clearing price is set to maximize matched volume.  The secondary criterion is to minimize net imbalance.  What is the clearing price?  What is the matched volume and net imbalance at that price?
A stock trader at a brokerage firm has noticed that price changes in the shares of...
A stock trader at a brokerage firm has noticed that price changes in the shares of Summer House Bakery each trade are dependent upon the previous trade's price change. Her observations can be summarized by the following transition matrix. (We are assuming +1/8, 0, -1/8 are the only possible price changes for this stock). ​ Next Price Change Most Recent Price Change +1/8 0 -1/8 +1/8 .7 .2 .1 0 .3 .4 .3 -1/8 .2 .1 .7 ​A) Provide a...
A stock trader at a brokerage firm has noticed that price changes in the shares of...
A stock trader at a brokerage firm has noticed that price changes in the shares of Summer House Bakery each trade are dependent upon the previous trade's price change. Her observations can be summarized by the following transition matrix. (We are assuming +1/8, 0, -1/8 are the only possible price changes for this stock). ​ Next Price Change Most Recent Price Change +1/8 0 -1/8 +1/8 .7 .2 .1 0 .3 .4 .3 -1/8 .2 .1 .7 ​A) Provide a...
A trader has invested equal amounts in Stock A and Stock B and knows the following:...
A trader has invested equal amounts in Stock A and Stock B and knows the following: Stock A’s daily average return is 0% and its daily standard deviation is 2%. Stock B’s daily average return is 0% and its daily standard deviation is 3%. The stocks have a correlation of 0.4. If returns are assumed to be normally distributed, calculate the 10 day Value-at-Risk (VaR) for this portfolio at the 99% level
1.     Use the following information and answer the following: Product Price 2019 Quantity 2019 Price 2020 Quantity...
1.     Use the following information and answer the following: Product Price 2019 Quantity 2019 Price 2020 Quantity 2020 Food $10 1,000 $12 1,200 Clothing $40 400 $48 500 Education $100 600 $120 120 Health care $200 300 $240 360 a.     Nominal GDP for 2019 and 2020. b.     Assume 2019 is the base year and calculate the price index for 2020. c.      Real GDP for 2020. d.     Nominal and real rate of growth of GDP. e.     Inflation rate between 2019 and 2020.
Consider the following limit order book for a share of stock. Bid Ask Price Shares Price...
Consider the following limit order book for a share of stock. Bid Ask Price Shares Price Shares $79.75 500 $79.80 500 79.70 900 79.85 400 79.65 700 79.90 900 79.60 1000 79.95 700 78.65 600 a. If a market sell order for 1200 shares comes in, at what price(s) will it be filled? from low to high b. Immediately after the order in a) is executed, what is the bid-ask spread of the stock? (Keep two decimal places.)
1.Which of the following orders instructs the broker to sell at or below a specified price?...
1.Which of the following orders instructs the broker to sell at or below a specified price? Select one: a. Limit-sell order b. Stop-loss c. Limit-buy order d. Stop-buy order e. Market order 2.Hedge funds may invest or engage in Select one: a. distressed firms. b. convertible bonds. c. currency speculation. d. merger arbitrage. e. All of the options are correct. 3.The smallest component of the fixed-income market is _______ debt. Select one: a. Treasury b. other asset-backed c. corporate d....
Kramer and Associates has the following account balances listed in alphabetical​ order: Accumulated​ Depreciation, $24,000; Accounts​...
Kramer and Associates has the following account balances listed in alphabetical​ order: Accumulated​ Depreciation, $24,000; Accounts​ Payable, $9,500, Accounts​ Receivable, $11,000;​ Cash, $4,000;​ Equipment, $47,000,​ Land, $23,000, Mortgage​ Payable, $46,000; Prepaid​ Insurance, $7,500;​ Supplies, $1,000; Unearned​ Revenue, $5,000; Wages​ payable, $2,000. Kramer and​ Associates' current liabilities​ are: A. ​$11,500. B. ​$62,500. C. ​$16,500. D. ​$57,500.
Two stocks has the following year-end stock prices and dividends: Stock 1 Stock 2 Year Price...
Two stocks has the following year-end stock prices and dividends: Stock 1 Stock 2 Year Price Dividend Price Dividend 1 $70 $150 2 $75 $1 $163 $2 3 $74 $1 $156 $2 4 $80 $2 $173 $1 Which stock has a higher annual average capital gain yield over the four years? Which stock has a higher average dividend yield?If T-bill rate is 2.0 percent, which stock has a higher average nominal risk premium based on the annual average total return?What...
1. Which of the following statements is true? a. An effective price ceiling reduces the quantity...
1. Which of the following statements is true? a. An effective price ceiling reduces the quantity of the good available to consumers, while an effective price floor increases the quantity of the good available to consumers. b. An effective price floor reduces the quantity of the good available to consumers, while an effective price ceiling increases the quantity of the good available to consumers. c. Government intervention in markets in the form of effective price ceilings or price floors increases...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT