Given widening bid-ask spread for a target stock, front by posting its own quotes in the spread, running the market makers is considered by a little Australian portfolio manager. Arranged in a number of rounds, the case asks students to post bid and request limitation orders for shares.
Each round enables orders to come in that execute against the limit order book, cash flow and end-of- the marketplace to revise the bid and ask quotes for the following round, along with round inventory to be calculated. The tension is starkly illustrated by this construction for market makers between bid-ask spread gains and stock trading uncertainty.
PUBLICATION DATE: June 07, 2011 PRODUCT #: UV5649-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
