Please see the attached
You have the following information on quotes for ACME common stock:
| Time | Exchange | Bid Price | Bid Size | Offer Price | Offer Size |
| 9:30:00 | NYSE | 55.00 | 10,000 | 59.00 | 100 |
| 9:30:01 | EDGX | 54.75 | 200 | 55.33 | 100 |
| 9:30:02 | BZX | 50.00 | 300 | 62.00 | 1,600 |
| 9:30:03 | NDAQ | 54.88 | 100 | 61.00 | 100 |
| 9:39:00 | NDAQ | 52.00 | 100 | 63.00 | 100 |
| 9:40:45 | EDGX | 51.98 | 200 | 55.44 | 1,500 |
| 9:45:00 | BZX | 50.00 | 1,000 | 60.00 | 400 |
| 9:45:30 | EDGX | 51.98 | 400 | 54.32 | 600 |
| 9:46:55 | BZX | 50.00 | 200 | 60.01 | 900 |
| 9:50:05 | EDGX | 51.52 | 300 | 57.56 | 600 |
| 9:52:10 | BZX | 50.00 | 100 | 60.02 | 800 |
| 9:55:44 | NYSE | 51.99 | 300 | 55.34 | 600 |
| 9:59:59 | BZX | 52.00 | 100 | 56.00 | 100 |
At 9:53:00, what is the National Best Offer Price?
|
| a. | |
|
| b. | |
|
| c. | |
|
| d. |
You have the following information on quotes for ACME common stock:
| Time | Exchange | Bid Price | Bid Size | Offer Price | Offer Size |
| 9:30:00 | NYSE | 55.00 | 10,000 | 59.00 | 100 |
| 9:30:01 | EDGX | 54.75 | 200 | 55.33 | 100 |
| 9:30:02 | BZX | 50.00 | 300 | 62.00 | 1,600 |
| 9:30:03 | NDAQ | 54.88 | 100 | 61.00 | 100 |
| 9:39:00 | NDAQ | 52.00 | 100 | 63.00 | 100 |
| 9:40:45 | EDGX | 51.98 | 200 | 55.44 | 1,500 |
| 9:45:00 | BZX | 50.00 | 1,000 | 60.00 | 400 |
| 9:45:30 | EDGX | 51.98 | 400 | 54.32 | 600 |
| 9:46:55 | BZX | 50.00 | 200 | 60.01 | 900 |
| 9:50:05 | EDGX | 51.52 | 300 | 57.56 | 600 |
| 9:52:10 | BZX | 50.00 | 100 | 60.02 | 800 |
| 9:55:44 | NYSE | 51.99 | 300 | 55.34 | 600 |
| 9:59:59 | BZX | 52.00 | 100 | 56.00 | 100 |
At 9:56:00, what is the National Best Offer Price?
|
| a. | |
|
| b. | |
|
| c. | |
|
| d. |
You have purchased 10,000 shares of E*Bay on margin at a price of $40.00 per share. You have a day job that prevents you from monitoring the market during the trading day. What type of order can you use if you are worried that your broker will liquidate your account if the price of E*Bay falls to $26.00 per share? Currently, the National Best Bid Price for E*Bay is $42.12 (300 shares bid) and the National Best Offer price for E*bay is $42.19 (800 shares offered).
|
| a. | A limit order to sell 10,000 shares of E*Bay at a price of $30.00 per share. |
|
| b. | A stop limit order to sell 10,000 shares of E*Bay at a price of $27.00 per share with a stop price of $55.00. |
|
| c. | A market order to sell 10,000 shares of E*Bay. |
|
| d. | A stop market order to sell 10,000 shares of E*Bay with a stop price of $27.00 |
A market receives the following sell orders. How are they ranked? That is, in what order will they be executed (1=first, 2=second, …, 5=last)? Write your answer in the column "Rank". The exchange ranks orders using price-time priority.
| Rank | Direction | Price | Time | Quantity | Trader |
|
| Sell | $50.50 | 9:30:00 | 200 | Steve |
|
| Sell | $50.70 | 9:30:05 | 100 | Rick |
|
| Sell | $50.50 | 9:30:08 | 400 | Nick |
|
| Sell | $50.90 | 9:30:12 | 200 | Andrea |
|
| Sell | $50.90 | 9:30:15 | 700 | Christine |
NYSE Arca conducts an Opening Auction every day at 4:00am ET. NYSE Arca accepts orders for the Opening Auction beginning at 3:30 a.m. ET, and continues accepting orders until the Opening Auction is conducted. Orders that participate in the Opening Auction cannot be canceled between 3:59 a.m. ET and 4:00 a.m. ET. The Opening Auction will occur at the Indicative Match Price — the price at which the maximum volume of orders is executable at the time of the auction. If two or more prices can maximize executable volume, the Opening Auction occurs at the price closest to the previous closing price in an effort to maintain continuity. Unexecuted orders become eligible for the Opening Session immediately upon conclusion of the Opening Auction.
Consider the book at 4:00 a.m. ET for ACME stock. The Previous Closing Price was $18.50.
| Entry Time | Buy Limit Orders | Sell Limit Orders | Order Price |
| 3:31 | 1,000 |
| $19.00 |
| 3:38 |
| 1,000 | $18.00 |
| 3:53 | 1,000 |
| $20.00 |
| 3:56 |
| 1,000 | $19.00 |
Given this information, what should be the Indicative Match Price of the Opening Auction? How many shares of ACME will be traded?
|
| a. | 1,000 shares at $18.50. |
|
| b. | 1,000 shares at $19.00. |
|
| c. | 2,000 shares at $18.50. |
|
| d. | 2,000 shares at $19.00. |
|
| e. | None of the above. |
The state of the book at 10:59am is:
|
| Trader | Sequence | Price | Quantity |
|
| Irina | 15.30 | 1,000 | |
|
| Gina | 15.20 | 500 | |
|
| Esteban | 15.10 | 100 | |
|
| Alice | 15.09 | 200 | |
| Sell | Dmitri | 15.08 | 300 | |
|
|
|
|
|
|
| Buy | Bruce | 15.05 | 400 | |
|
| Hans | 15.03 | 300 | |
|
| Cho | 15.02 | 200 | |
|
| Frank | 15.00 | 300 | |
|
| Jing | 14.52 | 2,000 |
At 11:00am John submits an order: Buy 400 shares, limit 15.08. What's the best bid and offer (BBO) after John's order is submitted?
|
| a. | The market is 15.05 bid for 400 shares, 300 shares offered at 15.08. |
|
| b. | The market is 15.05 bid for 400 shares, 100 shares offered at 15.09. |
|
| c. | The market is 15.08 bid for 100 shares, 200 shares offered at 15.09. |
|
| d. | None of the above. |
Which of the following statements is most accurate?
|
| a. | Investors who use market orders to buy 100 shares of a liquid stock typically pay the National Best Offer price. |
|
| b. | Investors who use market orders to buy 1,000 shares of a liquid stock typically pay the National Best Offer price. |
|
| c. | Investors who use market orders to sell 100 shares of a liquid stock typically receive the National Best Offer price. |
|
| d. | Investors who use market orders to sell 1,000 shares of a liquid stock typically receive the National Best Offer price. |
The state of the book at 10:59am is:
|
| Trader | Sequence | Price | Quantity |
|
| Irina | 15.30 | 1,000 | |
|
| Gina | 15.20 | 500 | |
|
| Esteban | 15.10 | 100 | |
|
| Alice | 15.09 | 200 | |
| Sell | Dmitri | 15.08 | 300 | |
|
|
|
|
|
|
| Buy | Bruce | 15.05 | 400 | |
|
| Hans | 15.03 | 300 | |
|
| Cho | 15.02 | 200 | |
|
| Frank | 15.00 | 300 | |
|
| Jing | 14.52 | 2,000 |
At 11:00am Peter submits an order: Sell 400 shares, limit 15.08. What's the best bid and offer (BBO) after Peter's order is submitted?
|
| a. | The market is 15.05 bid for 400 shares, 300 shares offered at 15.08. |
|
| b. | The market is 15.05 bid for 400 shares, 700 shares offered at 15.08. |
|
| c. | The market is 15.03 bid for 300 shares, 300 shares offered at 15.08. |
|
| d. | None of the above. |
The market for XYZ is bid 90.50, offered at 90.52. An order arrives to, "Buy limit 90.51." This order is considered to be:
|
| a. | A market order |
|
| b. | A non-marketable limit order |
|
| c. | A marketable limit order |
|
| d. | None of the above |
The state of the book at 10:59am is:
|
| Trader | Sequence | Price | Quantity |
|
| Irina | 15.30 | 1,000 | |
|
| Gina | 15.20 | 500 | |
|
| Esteban | 15.10 | 100 | |
|
| Alice | 15.09 | 200 | |
| Sell | Dmitri | 15.08 | 300 | |
|
|
|
|
|
|
| Buy | Bruce | 15.05 | 400 | |
|
| Hans | 15.03 | 300 | |
|
| Cho | 15.02 | 200 | |
|
| Frank | 15.00 | 300 | |
|
| Jing | 14.52 | 2,000 |
At 11:00am John submits an order: Buy 400 shares, limit 15.10. What's the best bid and offer (BBO) after John's order is submitted?
|
| a. | The market is 15.05 bid for 400 shares, 300 shares offered at 15.08. |
|
| b. | The market is 15.05 bid for 400 shares, 100 shares offered at 15.09. |
|
| c. | The market is 15.03 bid for 300 shares, 300 shares offered at 15.08. |
|
| d. | None of the above. |
Which of the following statements is most accurate?
|
| a. | Investors who use market orders to buy 100 shares of a liquid stock typically pay the National Best Bid price. |
|
| b. | Investors who use market orders to buy 1,000 shares of a liquid stock typically pay the National Best Bid price. |
|
| c. | Investors who use market orders to sell 100 shares of a liquid stock typically receive the National Best Bid price. |
|
| d. | Investors who use market orders to sell 1,000 shares of a liquid stock typically receive the National Best Bid price. |
The state of the book at 10:59am is:
|
| Trader | Sequence | Price | Quantity |
|
| Irina | 15.30 | 1,000 | |
|
| Gina | 15.20 | 500 | |
|
| Esteban | 15.10 | 100 | |
|
| Alice | 15.09 | 200 | |
| Sell | Dmitri | 15.08 | 300 | |
|
|
|
|
|
|
| Buy | Bruce | 15.05 | 400 | |
|
| Hans | 15.03 | 300 | |
|
| Cho | 15.02 | 200 | |
|
| Frank | 15.00 | 300 | |
|
| Jing | 14.52 | 2,000 |
At 11:00am Peter submits an order: Sell 500 shares, limit 15.05, FOK. What's the best bid and offer (BBO) after Peter's order is submitted?
|
| a. | The market is 15.05 bid for 400 shares, 300 shares offered at 15.08. |
|
| b. | The market is 15.05 bid for 400 shares, 700 shares offered at 15.08. |
|
| c. | The market is 15.03 bid for 300 shares, 300 shares offered at 15.08. |
|
| d. | None of the above. |
The state of the book at 10:59am is:
|
| Trader | Sequence | Price | Quantity |
|
| Irina | 15.30 | 1,000 | |
|
| Gina | 15.20 | 500 | |
|
| Esteban | 15.10 | 100 | |
|
| Alice | 15.09 | 200 | |
| Sell | Dmitri | 15.08 | 300 | |
|
|
|
|
|
|
| Buy | Bruce | 15.05 | 400 | |
|
| Hans | 15.03 | 300 | |
|
| Cho | 15.02 | 200 | |
|
| Frank | 15.00 | 300 | |
|
| Jing | 14.52 | 2,000 |
At 11:00am Peter submits an order: Sell 500 shares, limit 15.05, IOC. What's the best bid and offer (BBO) after Peter's order is submitted?
|
| a. | The market is 15.05 bid for 400 shares, 300 shares offered at 15.08. |
|
| b. | The market is 15.05 bid for 400 shares, 700 shares offered at 15.08. |
|
| c. | The market is 15.03 bid for 300 shares, 300 shares offered at 15.08. |
|
| d. | None of the above. |
A market receives the following sell orders. How are they ranked? That is, in what order will they be executed (1=first, 2=second, …, 5=last)? Write your answer in the column rank. The exchange ranks orders using price-time priority.
| Rank | Direction | Price | Time | Quantity | Trader |
|
| Sell | $40.00 | 12:22:00 | 200 | Steve |
|
| Sell | $40.00 | 12:22:05 | 100 | Rick |
|
| Sell | $40.50 | 12:22:08 | 400 | Nick |
|
| Sell | $40.25 | 12:22:12 | 200 | Andrea |
|
| Sell | $40.75 | 12:22:15 | 700 | Christine |
I'm a seller in a limit order market. I have a lot to sell (20,000 shares). The best bid in the market is $20.10. What type of order should I submit if I'm willing to sell at any price above $20.10 and I don't want the market to see any quantity that cannot executed immediately?
|
| a. | Immediate-or-cancel (IOC) |
|
| b. | All-or-nothing (AON) |
|
| c. | Fill-or-kill (FOK) |
|
| d. | None of the above |
In oral auctions, the open-outcry rule refers to:
|
| a. | Traders must publicly express all bids and offers so that all traders can act on them. |
|
| b. | Acceptances must be expressed publicly. |
|
| c. | The market is open from 9:30am to 4:00pm. |
|
| d. | All of the above. |
|
| e. | Only a. and b. |
|
| f. | Only b. and c. |
Circle the most accurate statement.
|
| a. | Price is not used to equilibrate supply and demand in continuous markets that use the discriminatory pricing rule to arrange trades. |
|
| b. | Price is not used to equilibrate supply and demand in call markets that use the uniform pricing rule to arrange trades. |
|
| c. | Price is not used to equilibrate supply and demand in crossing networks that use the derivative pricing rule to arrange trades. |
|
| d. | Each of the above statements (a, b, and c) is incorrect. |
The uniform pricing rule is commonly used for:
|
| a. | Opening or closing the market |
|
| b. | U.S. Treasury auctions |
|
| c. | Some IPOs |
|
| d. | All of the above. |
|
| e. | Only a. and b. |
|
| f. | Only b. and c. |
In a crossing network that uses derivative pricing rules:
|
| a. | The price is determined based on supply and demand. |
|
| b. | There's the possibility of price manipulation. |
|
| c. | Traders submit quantities and prices at which they want to trade. |
|
| d. | None of the above. |
You are in charge of determining the order precedence rules for the Upsilon Stock Exchange, which operates as a continuous electronic limit order book. If Upsilon's goal is to attract small market orders, what order precedence rule should Upsilon use to decide which standing limit order trades against incoming market orders?
|
| a. | Price, size, time. |
|
| b. | Price, time, size. |
|
| c. | Size, price, time. |
|
| d. | None of the above. |
