BFF2701 Equity Markets
Tutorial 1 Questions
Question 1
Discuss the importance of equity markets for the economy and for corporations.
Question 2
What is the macroeconomic objective of equity markets?
Question 3
What is an exchange’s objective in creating an equity market? What factors need to be considered in completing the objective?
Question 4
Discuss the costs and benefits associated with using market orders and limit orders.
Question 5
It is now 10:10:10 am and the limit order book of XYZ looks like this:
a) What would happen to the order book of XYZ if at 10:10:12 am, an order to sell 4,000 shares at a limit price of $100.02 entered the market?
b) What would happen to the order book of XYZ if at 10:10:13 am, an order to buy 3,000 shares at a limit price of $100.07 entered the market?
c) You believe that the buy order submitted at 10:10:13 am is from an informed trader (a trader with private information regarding future prices). How could you "free-ride" on his/her information?
Question 6 (Teall (2022) Q1.13)
Suppose that the last sale of Company X stock was at a price of $100.00. Further suppose that an investor wishes to place a market order to purchase 25,000 shares of Company X stock.
Which of the two markets has greater depth?