Question: Three sell orders are placed for a stock today. Listed below are the bid and ask quotes at various times: Time Bid Price Bid Size

Three sell orders are placed for a stock today. Listed below are the bid and ask quotes at various times:

Time

Bid Price

Bid Size

Ask Price

Ask Size

10:00 AM

$12.10

300

$12.16

400

1:00 PM

$12.00

300

$12.07

400

2:00 PM

$11.80

300

$11.88

400

The following trades take place:

a. At 10:00 AM, the trader placed an order to sell 100 shares. The execution price was $12.11.

b. At 1:00 PM, the trader placed an order to sell 300 shares. The execution price was $12.00.

c. At 2:00 PM, the trader placed an order to sell 600 shares. The average execution price was $11.75.

Calculate the quoted and effective spreads for each of these orders. 

Calculate the average quoted and average effective spread.

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