You are an equity trader in an over-leveraged hedge fund. Your manager urgently needs your analysis of the cost of liquidating a very large block of shares in Boeing with immediate effect. She wants a high level of certainty: 99% probability. Boeing is currently trading at $251.50 (bid), $251.40 (offer) and the position totals 900,000 shares. The mean of the stock spread is $2.20 and the standard deviation of the bid-offer spread is $5.50. Calculate the total cost of liquidation and explain your answer.

Answer rating: 100% (QA)

To calculate the total cost of liquidation we need to consider both the impact of the bidoffer sprea... View the full answer