An investment manager placed a limit order to buy 500,000 shares of Ahmad Corporation at SAR 21.35 limit at the opening of trading on February 8. The closing market price of Ahmad Corporation on February 7 was also SAR 21.35. The limit order filled 40,000 shares, and the remaining 460,000 shares were never filled. Some good news came out about Ahmad Corporation on February 8, and its price increased to SAR 23.60 by the end of that day. However, by the close of trading on February 14, the price had declined to SAR 21.74. The investment manager is analyzing the missed trade opportunity cost using the closing price on February 8 as the benchmark price.

A. What is the estimate of the missed trade opportunity cost if it is measured at a one-day interval after the decision to trade?

B. What is the estimate of the missed trade opportunity cost if it is measured at a one-week interval after the decision to trade?

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Quiz A To estimate the missed trade opportunity cost if it is measured at a oneday interval after th... View the full answer