# Equity Investments - Equity Investments Section 1

>>>>>>>>Equity Investments Section 1

 Buyer Bid size(# ofshares) Limit Price(\$ Offer size(# of shares) Seller A 900 9.70 B 100 9.84 C 300 9.89 D 200 10.02 10.03 700 X 10.11 1000 Y 10.16 300 Z

• Option : B
• Explanation : Dave’s average trade price is: \$9.93 = (200 * \$10.02 +300 * \$9.89 +100 * \$9.84) / (200 + 300 + 100) Dave’s sell order first fills with the most aggressively priced buy order, which is D’s order for 200 shares at \$10.02. Dave still has 800 shares for sale. The next most aggressively priced buy order is C’s order for 300 shares at \$9.89. This order is filled. Dave still has 500 shares for sale. The next most aggressively priced buy order is B’s order for 100 shares at \$9.84. A third trade takes place. Dave still has 400 shares for sale. The next buy order is A’s order for 900 shares at \$9.70. However, this price is below Dave’s limit price of \$9.83. Therefore, no more trade is possible.

• Option : B
• Explanation : An order is filled at the best available price as long as this price is lower than the limit price. In this case, the best available price is the market ask price = \$14.54 * (1 + 0.7%) = \$14.64. Since this price is lower than the limit price of \$14.75, the order will be filled at this price.

 Buyer Bid Size(# ofshares) Limit Price(\$) Seller Offer Size(# ofshares) LimitPrice (\$) 1 400 18.30 1 300 20.00 2 300 18.45 2 200 20.15 3 100 18.95 3 200 20.35 4 200 19.50 4 100 20.95 5 300 9.80 5 200

• Option : B
• Explanation : The limit buy order will be filled first with the most aggressively priced limit sell order and will be followed by filling with the higher priced limit sell orders that are needed up to and including the limit buy price until the order is filled. Average price = [(300 * \$20.00) + (200 * \$20.15) + (100 * \$20.35)] / 600 = \$20.11

• Option : B
• Explanation : Such investments trade in the secondary market and are a pooled investment vehicle.

• Option : B
• Explanation : Since this a best-effort arrangement, the issuer (IFT) bears the risk that the issue may be undersubscribed.