2019 CFA level 3 qbank reading 35 execution of portfolio decisions questions

10/12/2018 Learning Management System Question #1 of 68 Which of the following characterizes a need-trustworthy-agent trading focus? A) High commissions and potential leakage of information B) High commissions and concealment of information .in C) Low commissions and concealment of information en tre Question #2 of 68 Which of the following trading costs is NOT an explicit cost? B) Stamp duties C) Market impact costs .o m Question #3 of 68 bo ok c A) Commissions Which of the following is least accurate regarding the CFA Institute's Trade Management w w Guidelines? They state that investment management rms should: w A) have policies and procedures that assist in best execution B) provide general information on their trading techniques, markets, and brokers C) hire independent outside consultants to ensure best execution Question #4 of 68 Jack Steele has just determined using analysis that the prospects for Titan Steel are favorable He would like to trade before other investors realize Titan's prospects What type of trade should he use? https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 1/23 10/12/2018 Learning Management System A) participate B) limit C) market Question #5 of 68 Which of the following statements best characterizes a limit order? A limit order has: Question #6 of 68 bo ok c C) price uncertainty and execution uncertainty en tre B) price uncertainty but not execution uncertainty .in A) reduced price uncertainty but retains execution uncertainty In which of the following markets would the calculation of market impact costs be inappropriate? o B) Auction markets m A) Electronic limit-order markets w w w C) Electronic crossing networks Question #7 of 68 A trader must trade an entire portfolio of stocks Which of the following would be the best strategy to pursue? A) An implementation shortfall strategy B) A simple logical participation strategy based on VWAP C) A simple logical participation percent-of-volume strategy https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 2/23 10/12/2018 Learning Management System Question #8 of 68 Which of the following is least accurate regarding VWAP? VWAP: A) does not account for market movements or trade volume B) does not evaluate delayed or un lled orders C) is applicable to small and large trades .in Question #9 of 68 A trade's volume is a small percentage of average daily trading volume The trade has low A) Placing the trade in a crossing system en tre spreads and is urgent Which of the following would be the best method of lling the trade? bo ok c B) The use of a simple logical participation strategy based on VWAP C) The use of an implementation shortfall strategy m Question #10 of 68 o Which of the following is NOT a relevant measure of market quality? w w A) Market prevalence B) Assurity of completion w C) Liquidity George White, CFA, and Elizabeth Plain, CFA, manage an account for Briggs and Meyers Securities In managing the account, White and Plain use a variety of strategies, and they trade in di erent markets They use econometric analysis to estimate costs, for example, and algorithmic methods to execute the strategies White and Plain also use both market orders and limit orders Their supervisor has asked them to compose a summary of their trading records to see how the various strategies have worked https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 3/23 10/12/2018 Learning Management System The supervisor asks about how to assess the costs and risks of the various types of trades The supervisor speci cally asks White and Plain to explain the di erence in the risks associated with market and limit orders After White and Plain explain how limit orders can give a better price, the supervisor asks why they wouldn't always use limit orders White explains the details of execution uncertainty and price uncertainty and how they relate to market and limit orders As part of the discussion, Plain explains the principle of the e ective spread that is associated with market orders She uses a recent example where the quoted bid and ask price of GHT stock was $25.40 and $25.44 respectively When White and Plain put in a buy order for 300 shares of GHT stock, at that quoted spread, the order was immediately executed at $25.45 She then calculates the e ective spread .in In summarizing transactions costs, White explains how transactions costs include both implicit and explicit costs He describes a recent situation where he and Plain placed a large buy order en tre for CRD stock Only half of the trade was executed on the day the order was made, and the second half of the buy order for CRD was executed on the following day This occurred because the order was for a large number of shares and CRD stock traded in a relatively illiquid market bo ok c The supervisor asks if there are methods for analyzing and predicting costs associated with the size of the order and the liquidity of the market White and Plain use an econometric model as part of their pre-trade analysis to estimate implicit transactions costs Their econometric models use the following inputs: market capitalization, volume, and measures of momentum White says that linear econometric models have proven the most e ective because the inputs m are fairly normally distributed Plain says that in addition to simply estimating the costs of a o proposed trade, the model can also indicate the optimal size of the trade w w White and Plain also explain their algorithmic methods of trading They engage in passive trading combined with pegging and discretion strategies that are designed to seize liquidity They recently decided to trade GHT stock using algorithmic methods White said that GHT was a w good stock to trade this way because their trades of the stock are very small in relation to the volume of the stock in the whole market Plain adds by saying that GHT has a large spread, and this also makes algorithmic trading ideal for this stock Question #11 of 68 Which of the following statements regarding market orders is most accurate? Market orders: A) have price uncertainty, and limit orders have execution uncertainty B) have execution uncertainty, and limit orders have price uncertainty https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 4/23 10/12/2018 Learning Management System C) and limit orders both have execution uncertainty and no price uncertainty Question #12 of 68 In the example given by Plain, what was the e ective spread for the order of 300 shares of GHT stock? A) $0.04 in B) $0.06 en tre C) $0.02 bo ok c Question #13 of 68 In the example given by White, the term that describes the costs associated with the purchase of CRD stock is: B) delay costs m A) volume-weighted costs w w o C) missed trade opportunity w Question #14 of 68 In the discussion concerning the use of econometric methods in estimating trading costs, White commented on the use of linear methods, and Plain commented on using the models to estimate the optimal trade size With respect to these statements: A) both White and Plain were correct B) White was incorrect and Plain was correct C) White was correct and Plain was incorrect https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 5/23 10/12/2018 Learning Management System Question #15 of 68 With respect to the reasons given for using algorithmic methods for trading GHT stock: A) White was correct and Plain was incorrect B) White and Plain were both correct C) Plain was correct and White was incorrect .in Question #16 of 68 A) simple logical participation strategy B) opportunistic participation strategies .o A market order has: m Question #17 of 68 bo ok c C) implementation shortfall strategy en tre The best classi cation of the algorithmic method used by White and Plain is: w w A) price uncertainty but not execution uncertainty B) both price uncertainty and execution uncertainty w C) execution uncertainty but not price uncertainty Question #18 of 68 Which of the following trades would be predicted to have the highest trading costs using an econometric model? A) A large buy order in an upward trending market B) A small buy order in an upward trending market C) A large buy order in a downward trending market https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 6/23 10/12/2018 Learning Management System Question #19 of 68 Which of the following variables is NOT typically used in econometric models to assess trading costs? A) Risk B) Market model alpha .in C) Momentum en tre Question #20 of 68 Which of the following trade motivations would most likely use a low-cost-whatever-the- bo ok c liquidity trading focus? A) Passive and value-motivated B) Liquidity and information-motivated .o m C) Liquidity and value-motivated w w Question #21 of 68 Where would an illiquid security in a developing country most likely trade? w A) Broker markets B) Electronic limit-order markets C) Electronic crossing networks Question #22 of 68 Which of the following is least accurate regarding best execution? A) Each party to a trade determines what best execution is https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 7/23 10/12/2018 Learning Management System B) Best execution can be measured for a single trade C) Best execution cannot be judged separately of the investment decision Question #23 of 68 Which of the following is least accurate regarding best execution? A) Best execution can determine a trader’s e ectiveness over time .in B) Best execution prevents high cost trades from taking place en tre C) Best execution can be measured after the fact for a series of trades bo ok c Question #24 of 68 Market A has average bid and ask sizes of 400 shares Market B has average bid and ask sizes of 600 shares Market C has average e ective spreads of $0.034 Market D has average e ective spreads of $0.039 Comparing A to B and C to D, which markets are of the highest quality? m A) A and C w w w C) B and D .o B) B and C Question #25 of 68 Which of the following is NOT one of the three components of the CFA Institute's Trade Management Guidelines? A) Measurement tools B) Disclosures C) Processes https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 8/23 10/12/2018 Learning Management System Question #26 of 68 Which of the following is least accurate regarding the CFA Institute's Trade Management Guidelines? They state that investment management rms: A) should strive for best execution B) must not disclose documentation concerning policies and procedures to outside parties Question #27 of 68 en tre in C) must disclose their icts of interest related to trading In which of the following markets is an order most likely to go un lled or partially lled? A) Electronic crossing networks bo ok c B) Electronic limit-order markets C) Auction markets m As the senior portfolio manager for the Calvert Pension Fund, Jill Hohlman is responsible for o the investment decisions as well as the execution of trades Debbie Walker is responsible for the equity portion of the Calvert Pension Fund portfolio It is Hohlman's belief that her portfolio w w managers should be able to measure trading costs as well as have a complete understanding of available trading techniques w Discussing the types of trading cost benchmarks, Hohlman states that the volume-weighted average price (VWAP) is a weighted average of security prices during a day, where the weight applied is the proportion of the day's trading volume She states further that the volumeweighted average price is preferred to the trading cost benchmark alternative of the opening day's stock price because the opening price can be gamed to a greater extent by traders, relative to the volume-weighted average price She also mentions that the e ective spread is another useful alternative to the opening price because the e ective spread cannot be gamed Discussing the types of trading cost benchmarks further, Walker states that the implementation shortfall, which is the di erence between the actual portfolio's return and a paper portfolio's return, is probably the most accurate measure of trading costs She states that the paper portfolio's return is based on the security price when the decision to trade is originally made https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 9/23 10/12/2018 Learning Management System She mentions that it is not subject to gaming, and incorporates both explicit and implicit trading costs Hohlman asks Walker to evaluate a trade made last week for the Calvert Pension Fund, using the implementation shortfall measure The trade was a buy order for the stock of Brucker Industries Brucker Industries is a small cap stock, which Hohlman thinks is a timely buy given recent announcement about the rm's prospects On Wednesday, Brucker Industries stock price closed at $20.00 a share On Thursday morning before the market opened, the portfolio manager for the Calvert Pension Fund decided to buy Brucker Industries and transferred a limit order for $19.97 a share for 1000 shares to the trader The order expired un lled The Brucker Industries stock closed at $20.03 on Thursday On Friday, the order was revised to a limit of in $20.07 The order was partially lled that day as 800 shares were bought at $20.07 The en tre commission was $14 The stock closed at $20.09 on Friday and the order was cancelled Question #28 of 68 bo ok c Regarding Hohlman's statement concerning trading cost benchmarks: A) Hohlman is incorrect because the opening price cannot be gamed more than the volume-weighted average price B) Hohlman is correct w w o m C) Hohlman is incorrect because the e ective spread can be gamed w Question #29 of 68 Regarding Walker's statement concerning the implementation shortfall: A) Walker is correct B) Walker is incorrect because the implementation shortfall is subject to gaming C) Walker is incorrect because the implementation shortfall does not incorporate implicit trading costs Question #30 of 68 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 10/23 10/12/2018 Learning Management System What is the realized pro t and loss component of the implementation shortfall measure Walker should calculate for the Brucker Industries trade? A) 0.16% B) 0.12% C) 0.09% .in Question #31 of 68 What is the delay costs component of the implementation shortfall measure Walker should en tre calculate for the Brucker Industries trade? A) 0.24% C) 0.18% m Question #32 of 68 bo ok c B) 0.12% .o What is the missed trade opportunity cost component of the implementation shortfall measure w w Walker should calculate for the Brucker Industries trade? A) 0.09% w B) 0.18% C) 0.12% Question #33 of 68 What is the implementation shortfall Walker should calculate for the Brucker Industries trade? A) 0.51% B) 0.44% C) 0.37% https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 11/23 10/12/2018 Learning Management System Question #34 of 68 Which of the following is least accurate regarding the role of ethics in trading? A) The relationship between buy-side and sell-side traders is becoming less adversarial B) Trust has become more important .in C) Buy-side traders have a duciary duty to maximize the value of the client’s portfolio en tre Question #35 of 68 Suppose a trader is quoted a market bid price of $30.00 and an ask of $30.07 The execution price of a buy order is $30.04 What is the e ective spread? bo ok c A) $0.02 B) $0.06 m C) $0.01 .o Question #36 of 68 shortfall: w w Which of the following is least accurate regarding implementation shortfall? Implementation w A) requires considerable data and analysis B) is subject to gaming C) decomposes and identi es costs Question #37 of 68 Which of the following markets does NOT provide price discovery? A) Auction markets https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 12/23 10/12/2018 Learning Management System B) Electronic crossing networks C) Electronic limit-order markets Question #38 of 68 Passive traders emphasize: A) price in their trading and use market orders .in B) price in their trading and use limit orders en tre C) time in their trading and use market orders bo ok c Question #39 of 68 A trade's volume is a small percentage of average daily trading volume The trade has low spreads and is not urgent Which of the following would be the best method of lling the trade? A) Placing the trade in a crossing system m B) The use of a simple logical participation strategy based on VWAP w w o C) The use of an implementation shortfall strategy w Question #40 of 68 Suppose a trader is quoted a market bid price of $16.00 and an ask of $16.10 The execution price of a sell order is $16.03 What is the e ective spread? A) $0.03 B) $0.04 C) $0.02 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 13/23 10/12/2018 Learning Management System Patty Benson and Terry Wortek are portfolio managers of a life insurance fund, Arbutus Insurance Benson is the more experienced of the two, and oversees all investment decisions as well as the execution of trades Wortek assists her with her decisions Benson has placed a strong emphasis on trade execution e ciency because her analysis of trades during last year suggests that Arbutus Insurance is not receiving best trade execution Discussing the types of trading venues, Benson remarks that electronic crossing networks are types of order-driven markets In these markets, she states that their advantage is that trading costs are low She states that their disadvantage is that an order may not be lled Wortek notes that Arbutus has positions in several international stocks, several of which are in illiquid She states that in these markets where public capital markets are not well developed, Arbutus would likely trade in a brokered market Wortek notes that a disadvantage of these en tre markets is that Arbutus could lose their anonymity, especially when they have a large block to sell Benson asks Wortek to analyze a series of trades for the rm so that she can evaluate the rm's bo ok c trading e ectiveness The bid and ask volumes as well as bid and ask quotes are provided in the table below The trading data below represents the quotes for a single stock, Papineau Pharmaceuticals, on a single day Bid Price Bid Size Ask Price Ask Size 10 a.m $10.00 800 $10.07 700 $9.90 500 $9.96 600 400 $9.94 500 $9.88 w w p.m .o 12 p.m m Time of Trade At 10 a.m the trader for Arbutus Insurance placed an order to sell 900 shares of Papineau w Pharmaceuticals The execution price was $9.98 At 12 p.m the trader for Arbutus Insurance placed an order to sell 500 shares of Papineau Pharmaceuticals The execution price was $9.92 At p.m the trader for Arbutus Insurance placed an order to sell 300 shares of Papineau Pharmaceuticals The average execution price was $9.91 Question #41 of 68 Regarding Benson's statement concerning electronic crossing networks: A) Benson is incorrect because trading costs are high in electronic crossing networks https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 14/23 10/12/2018 Learning Management System B) Benson is incorrect because orders are necessarily lled in electronic crossing networks C) Benson is correct Question #42 of 68 Regarding Wortek's statement concerning brokered markets: in A) Wortek is incorrect because brokered markets allow traders to remain anonymous B) Wortek is incorrect because auction markets are more common in lesser developed en tre capital markets Question #43 of 68 bo ok c C) Wortek is correct B) $0.0633 w w w C) $0.0200 .o A) $0.0433 m What is the average quoted spread Wortek should calculate for the Arbutus Insurance trades? Question #44 of 68 What is the average e ective spread Wortek should calculate for the Arbutus Insurance trades? A) $0.0433 B) $0.0200 C) $0.0233 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 15/23 10/12/2018 Learning Management System Question #45 of 68 What is the weighted average e ective spread Wortek should calculate for the Arbutus Insurance trades? A) $0.0641 B) $0.0633 C) $0.0266 .in Question #46 of 68 en tre Which of the following best represents the analysis Wortek should provide for the Arbutus Insurance trades? A) None of the trades resulted in price improvement bo ok c B) Two of the trades resulted in price improvement but the third did not m C) One of the trades resulted in price improvement but the other two did not .o Question #47 of 68 w w Which of the following trading costs results when an order is not lled? A) Market impact costs w B) Price impact costs C) Delay costs Question #48 of 68 Which of the following statements regarding econometric models is CORRECT? Econometric models: A) are used to forecast trading costs and assess trading e ectiveness https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 16/23 10/12/2018 Learning Management System B) are not useful for forecasting trading costs or assessing trading e ectiveness C) are only useful for forecasting trading costs Question #49 of 68 Which of the following measures is least susceptible to gaming by traders? A) Implementation Shortfall .in B) VWAP en tre C) E ective spread bo ok c Question #50 of 68 Which of the following trading tactics would most likely be used by an information-motivated trader? B) Liquidity-at-any-cost m A) Costs-are-not-important w w o C) Need-trustworthy-agent w Question #51 of 68 Information-motivated traders emphasize: A) time in their trading and use market orders B) price in their trading and use market orders C) price in their trading and use limit orders Question #52 of 68 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 17/23 10/12/2018 Learning Management System A trade's volume is a large percentage of average daily trading volume and has high spreads Which of the following would be the best method of lling the trade? A) A simple logical participation percent-of-volume strategy B) A simple logical participation strategy based on VWAP C) Placing the trade with a broker .in Question #53 of 68 Suppose a trader is quoted a market bid price of $40.40 and an ask of $40.49 The execution en tre price of a buy order is $40.47 What is the e ective spread? A) $0.050 C) $0.090 m Question #54 of 68 bo ok c B) $0.025 .o Which of the following is least accurate regarding best execution? Best execution: w w A) should be judged independently of the investment decision B) is similar to the prudence concept w C) depends on relationships and practices Question #55 of 68 A simple logical participation strategy trades: A) with market ow and attempts to minimize opportunity costs B) early in the day and attempts to minimize market impact C) with market ow and attempts to minimize market impact https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 18/23 10/12/2018 Learning Management System Question #56 of 68 If the volume-weighted average price (VWAP) during a day was $21 and 100 shares were bought at $20.40, which of the following statements regarding the costs of trading is most accurate? A) The implicit costs are -$60 B) The implicit costs are $60 .in C) The explicit costs are -$60 en tre Question #57 of 68 Which of the following is NOT a characteristic of a liquid market? B) Homogenous traders m C) Integrity bo ok c A) An abundance of traders .o Question #58 of 68 w w Which of the following is least accurate regarding best execution, the CFA Institute's Trade Management Guidelines, and ethics in trading? w A) Record keeping is a key component of the CFA Institute’s Trade Management Guidelines B) Best execution should be measured over short, relevant time periods C) The buy-side trader’s relationship with clients must come before their relationship with sell-side traders Question #59 of 68 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 19/23 10/12/2018 Learning Management System If the market return was 1.2% over the time period of trading, the risk-free rate was 0.1%, the stock beta was 1.3, and the shortfall implementation cost is 0.48% for trading in the stock, then what is the shortfall implementation cost to which the manager should be held accountable? A) -1.07% B) -1.08% C) 1.07% .in Question #60 of 68 accurate? en tre Which of the following statements regarding the implementation shortfall components is least A) Realized pro t and loss represents the di erence between the execution price and the bo ok c previous day's closing price B) Missed trade opportunity cost is weighted by the portion of the order that is lled C) Missed trade opportunity cost represents the di erence between the price at which the o m order is cancelled and the original price w w Question #61 of 68 Frank Rolle is a portfolio manager who works for a rm that o ers comprehensive portfolio w management and employs buy-side traders Rolle and his buy-side trader are considering shifting their business to a sell-side trader, Jack Smith Smith has promised that Rolle and his traders will gain access to investment research put out by his rm Rolle knows that Smith's rm tends to charge higher commissions Rolle does not believe the quality of Smith's research to be any better than he is currently receiving from other sell-side traders What should Rolle do? A) Not trade with Smith because his research is of no better quality B) Not trade with Smith because the interests of his clients come rst C) Trade with Smith because he may have better research https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 20/23 10/12/2018 Learning Management System Question #62 of 68 A trader submits a buy order that speci es that the trade must be executed at $40 by the end of the day The execution price is $39.88 What type of order has the trader executed? A) A market order B) A limit order C) A principal order en tre in Question #63 of 68 Use the following information to determine how the trades should be placed for the following shares Average Daily Volume Spread Urgency 20,000 400,000 0.04% Low LMNO 60,000 1,000,000 0.07% High WXYZ 75,000 150,000 0.60% Low Trade Size ABCD m bo ok c Stock Ticker A) ABCD should be traded using a simple logical participation strategy, LMNO should be o traded using a shortfall implementation strategy, and WXYZ should be placed with a w w b k B) ABCD should be traded using a shortfall implementation strategy, LMNO should be w placed with a broker, and WXYZ should be traded using a simple logical participation C) ABCD should be traded using a shortfall implementation strategy, LMNO should be traded using a simple logical participation strategy, and WXYZ should be placed with a b k Question #64 of 68 Which of the following statements regarding a buy-side trader's priority is CORRECT? A) Their relationships with their broker, the client, and sell-side traders are of equal priority https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 21/23 10/12/2018 Learning Management System B) Their relationship with the client must come rst C) Their relationship with sell-side trader must come rst Question #65 of 68 A shortfall implementation strategy trades: A) early in the day and attempts to maximize trading cost volatility en tre C) early in the day and attempts to minimize opportunity costs .in B) with market ow and attempts to minimize opportunity costs bo ok c Question #66 of 68 Which of the following implementation shortfall components is NOT in uenced by market-wide movements? A) Explicit costs m B) Realized pro t and loss w w o C) Missed trade opportunity cost w Question #67 of 68 Value-motivated traders emphasize: A) time in their trading and use limit orders B) price in their trading and use limit orders C) price in their trading and use market orders Question #68 of 68 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 22/23 10/12/2018 Learning Management System Use the following information to calculate the implementation shortfall components: On Wednesday, the stock price closes at $40 a share On Thursday morning before market open, the portfolio manager decides to buy Megawidgets and transfers a limit order for $39.95 a share, for 1,000 shares The price never falls to $39.95 during the day and the order expires un lled The stock closes at $40.04 On Friday, the order is revised to a limit of $40.05 The order is partially lled that day as 700 shares are bought at $40.05 The commission is $17 The stock closes at $40.08 and the order is cancelled .in A) The opportunity costs are 0.06% and the total implementation shortfall is 0.19% B) The opportunity costs are 0.07% and the total implementation shortfall is 0.19% w w w o m bo ok c en tre C) The opportunity costs are 0.06% and the total implementation shortfall is 0.15% https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice/qbank/24038518/quiz/83448395/print 23/23 ... maximize the value of the client’s portfolio en tre Question #35 of 68 Suppose a trader is quoted a market bid price of $30 .00 and an ask of $30 .07 The execution price of a buy order is $30 .04 What is... https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice /qbank/ 24 038 518/quiz/ 834 4 839 5/print 11/ 23 10/12/2018 Learning Management System Question #34 of 68 Which of the following is least accurate regarding the role of ethics... trades? A) $0.0 433 B) $0.0200 C) $0.0 233 https://www.kaplanlearn.com/education/dashboard/index/66a9ea0d62bb71ab495925615029a3fd/practice /qbank/ 24 038 518/quiz/ 834 4 839 5/print 15/ 23 10/12/2018 Learning