Part I Your financial statement analysis suggests that Tech Firm A (TFA) has been engaging in...

 

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Part I Your financial statement analysis suggests that Tech Firm A (TFA) has been engaging in accruals earnings management to boost its earnings. Based on this analysis, you decide to short TFA stock. Today is December 2, 2019 and TFA announces its earnings on February 3, 2020. You decide to enter into your short position immediately since the price may converge to fundamental value prior to the earnings announcement as other funds come to the same conclusions about TFAS financial statements. The order book for TFA is: Bid Ask Price Size Price Size $101 1500 $99.75 1500 $102 500 $102.50 1000 $99 1000 $103 2000 $98 2000 $110 1000 $50 5000 1. What is the bid-ask? What is the bid-ask spread? 2. If you placed a market order to short 2000 shares, how much cash would you receive from this sale? 3. Instead of a market order, if you placed a limit sell order to sell 2000 shares at $101.20, what would the new order book look like? (please fill in above). What is the new bid-ask? What is the new bid-ask spread? Part I Your financial statement analysis suggests that Tech Firm A (TFA) has been engaging in accruals earnings management to boost its earnings. Based on this analysis, you decide to short TFA stock. Today is December 2, 2019 and TFA announces its earnings on February 3, 2020. You decide to enter into your short position immediately since the price may converge to fundamental value prior to the earnings announcement as other funds come to the same conclusions about TFAS financial statements. The order book for TFA is: Bid Ask Price Size Price Size $101 1500 $99.75 1500 $102 500 $102.50 1000 $99 1000 $103 2000 $98 2000 $110 1000 $50 5000 1. What is the bid-ask? What is the bid-ask spread? 2. If you placed a market order to short 2000 shares, how much cash would you receive from this sale? 3. Instead of a market order, if you placed a limit sell order to sell 2000 shares at $101.20, what would the new order book look like? (please fill in above). What is the new bid-ask? What is the new bid-ask spread?

Answer rating: 100% (QA)

1 Bidask and Bidask spread The bidask for TFA is the highest price a buyer is willing to ... View the full answer