Instruction: - The solution to each question should include detailed calculation steps and (or) explain why you choose that answer. No any step means ZERO point.

2. Consider the following limit-order book of a market-maker. The last trade in the stock took place at a price of $50.

Limit-Buy Orders		Limit-Sell Orders
Price ($)	Shares	Price ($)	Shares
49.75	500	50.25	100
49.50	800	51.50	100
49.25	500	54.75	300
49.00	200	58.25	100
48.50	600

a. If a market-buy order for 100 shares comes in, at what price will it be filled?

b. At what price would the next market-buy order be filled?

c. If you were the specialist, would you desire to increase or decrease your inventory of this stock?