4. The stock market A stock market is a public market for trading a company's...
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4. The stock market A stock market is a public market for trading a company's equities The difference between the price at which a dealer will sell a certain security and the price at which a dealer will buy a security is called the bid-ask spread Fernando, a trader, wants to buy 1,000 shares of XYZ stock, while a second trader, Ally, is willing to sell 1,500 shares of the same stock. Unfortunately, Fernando and Ally don't know one another, and must complete their transactions using the stock exchange's market-making dealer. XYZ's market- maker is willing to sell her shares for $22.55 per share and purchase additional shares for $22 per share. Select the most appropriate values in the following table: Term Value Bid price Ask price Bid-ask spread If the market-maker is willing to purchase the entire block of 1,500 shares from Ally and, from that block, resell 1,000 shares to Fernando, then the market-maker's net profit from Fernando's transaction-excluding any inventory effects-will be
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