The following quotes were observed for Buffin Corp. (ticker: BUFN) on the two dates indicated. a. Suppose

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The following quotes were observed for Buffin Corp. (ticker: BUFN) on the two dates indicated.

a. Suppose you decide to use a market order to buy 1000 shares of BUFN on September 16 and then sell the 1000 shares using a market order on September 17. Assuming no brokerage commissions, how much of a gain or loss did you make?

b. Suppose you decide to use limit orders instead of market orders. On September 16 you put in a limit order to buy 1000 shares of BUFN at $15.08 per share. On September 17 you put in a limit order to sell 1000 shares of BUFN at $15.18 per share. Both orders were executed on their respective days. Assuming no brokerage commissions, how much of a gain or loss did you make?

c. What are the trade-offs between using market orders and limit orders?

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Fundamentals Of Corporate Finance

ISBN: 9780137309948

4th Canadian Edition

Authors: Jonathan Berk, Peter DeMarzo, David A. Stangeland, Andras Marosi, Jarrod Harford

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