(i) Consider the following case, show the benchmark price, opportunity cost, implicit cost and explicit cost? [8]
At some point, the investment manager decides to buy 2, 000 Manchester United stocks, which trades at $20.00.
A limit order is placed in the market, say at $19.95 and is not executed at all.
The market closes on that day at $20.10.
The commission is $0.05 per share.
The following day, the order is revised at $20.15 and 1, 500 stocks are filled at that price, and the market closes at $20.20.
At some point, the investment manager decides to buy 2, 000 Manchester United stocks, which trades at $20.00.
A limit order is placed in the market, say at $19.95 and is not executed at all.
The market closes on that day at $20.10.
The commission is $0.05 per share.
The following day, the order is revised at $20.15 and 1, 500 stocks are filled at that price, and the market closes at $20.20.