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Equity Investments Q51

51A trader places a limit order to buy shares at a price of $14.75 with the stock trading at a market bid price of $14.54 and the bid-ask spread of 0.7%. The order will most likely be filled at:
  • 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.
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