Give the following bids and offers for AAPL, what is the best price that one could using a market order: a. Sell 200 shares b. Buy 200 shares C. Sell 500 shares d. Buy 500 shares Amount Price Limit Order: Buy or Sell Sell Sell Sell Buy Buy Buy 200 300 100 100 300 200 124.50 124.00 123.50 122.50 122.00 121.50

In the exchange the dealer quotes the bid and ask prices for different stock. They quote both the bid and ask prices for the particular stock and create their limit book where they mention how much amount of stock they want to buy and sell with their corresponding prices. The ask prices are always greater than the bid prices quoted by the dealer. The dealer always buy the stock at the bid prices but sell the same at the ask prices. The spread that is the different between bid and ask prices is earned by the dealer for one round trip. The one round trip refers to buy and sell of that particular stock. If the investor wants to buy the stock he has to pay the ask prices ( higher prices). From investor's point of view,  they require highest bid prices and lowest ask prices which means they want to buy at lowest prices and sell at higher bid prices but this is not possible.

The limit book always has the bid prices from highest to lowest and ask prices from lowest to highest prices.

a. Sell 200 shares :

The investor has to sell the shares at the bid prices and in the limit book the bid prices are from highest to lowest as it is beneficial to the investors. In the above question , sell orders have amount corresponding to known as bid prices and buy orders have amount corresponding to known as ask prices from investor's perpective.

So, one has to sell 200 shares. So, first he has to sell at highest bid price which is $124.50 and it has 200 shares in corresponding to it. One will sell whole 200 shares at $124.50. So, the best price for selling 200 shares is $124.50.

Total price one will receive for selling 200 shares = $ 124.50*200 = $24900

b. Buy 200 shares:

One, has to buy the shares at the ask prices. In the limit book ask prices are from lowest to highest. So, one will buy 200 shares at lowest ask price which is $121.50. So, the best price for buying 200 shares is $121.50.

Total price one has to pay to buy 200 shares = $121.50*200 = $24300

c. Sell 500 shares:

One, has to sell the shares at the bid prices. In the limit book bid prices are from highest to lowest. So, the best price for selling 500 shares are:

First 200 shares will be sold at $124.50

Second, 300 shares will be sold at $124

Total price one will receive while selling 500 shares will be : 124.50*200 + 124*300 = $ 24900 + 37200 = $62100

d. Buy 500 shares:

One, has to buy the shares at the ask prices. In the limit book bid prices are from lowest to highest. So, the best price for buying 500 shares are:

First, 200 shares will be bought at $121.50

Second, 300 shares will be bought at $122

Total price one will pay while buying 500 shares will be : 121.50*200 + 122*300 = $ 24300 + 36600 = $ 60900