This topic contains a solution. Click here to go to the answer

Author Question: Financial Innovation More and more of the back office tasks for commodity traders and market makers ... (Read 55 times)

burton19126

  • Hero Member
  • *****
  • Posts: 532
Financial Innovation More and more of the back office tasks for commodity traders and market makers can be easily automated which lowers the costs of making transactions. What is the effect of these technical changes on the bid-ask spreads between commodity buyers and sellers at commodity exchanges?

Question 2

The optimal bidding strategy for an oral auction is
 a. To shade your bid below your true value and drop out well before it is reached
 b. To shade your bid below your true value and drop out just when the shaded amount is reached
  c. To drop out when the bidding exceeds your true value
 d. To size up your competition to determine how much to shade your bid



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

spencer.martell

  • Sr. Member
  • ****
  • Posts: 342
Answer to Question 1

The cost of making a market falls. This means a market maker can complete a transaction at lower cost making an existing spread more profitable. He can increase the number of transactions he completes by lowering the spread. Moreover, if he does not lower the spread, traders may seek out a different market maker offering better terms. Therefore, the bid-ask spread within the market will succumb to price pressure and shift lower.

Answer to Question 2

c




burton19126

  • Member
  • Posts: 532
Reply 2 on: Jul 1, 2018
YES! Correct, THANKS for helping me on my review


cassie_ragen

  • Member
  • Posts: 347
Reply 3 on: Yesterday
:D TYSM

 

Did you know?

Congestive heart failure is a serious disorder that carries a reduced life expectancy. Heart failure is usually a chronic illness, and it may worsen with infection or other physical stressors.

Did you know?

The senior population grows every year. Seniors older than 65 years of age now comprise more than 13% of the total population. However, women outlive men. In the 85-and-over age group, there are only 45 men to every 100 women.

Did you know?

Although the Roman numeral for the number 4 has always been taught to have been "IV," according to historians, the ancient Romans probably used "IIII" most of the time. This is partially backed up by the fact that early grandfather clocks displayed IIII for the number 4 instead of IV. Early clockmakers apparently thought that the IIII balanced out the VIII (used for the number 8) on the clock face and that it just looked better.

Did you know?

To combat osteoporosis, changes in lifestyle and diet are recommended. At-risk patients should include 1,200 to 1,500 mg of calcium daily either via dietary means or with supplements.

Did you know?

More than 150,000 Americans killed by cardiovascular disease are younger than the age of 65 years.

For a complete list of videos, visit our video library