High School

Which of the following apply to limit order book markets?

A. None of the other options
B. All orders are visible to all market participants
C. Trading is necessarily anonymous
D. They cannot coexist with a call auction

Answer :

Final answer:

In a limit order book market, all orders are visible to all participants and these types of markets cannot coexist with call auctions. These markets are very transparent and allow for real-time decision making based on visible buy and sell orders.

Explanation:

A limit order book market is a type of financial market where orders are visible and participants have the option to place trades at specific prices rather than the current market price. Hence, the options b and e apply to limit order book markets.

Option b is correct in saying that 'All orders are visible to all market participants'. This is because in a limit order book market, information about buy and sell orders is displayed to all participants. This makes the market transparent and participants can see the depth of the market, which helps them in their decision-making process.

As for option e, 'They cannot coexist with a call auction', it is also correct. A call auction is a type of trading method where orders are accumulated and matched at certain specific times, whereas in limit order book markets, orders are continuously matched in real-time.

Therefore, these two types of trading methods cannot coexist in the same marketplace.

Learn more about Limit Order Book Market here:

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