Case #1 - T. Rowe Price - Results
Attempt 1 of 1
Written Jul 17, 2026 1:09 PM - Jul 18, 2026 1:30 PM
Released Sep 27, 2024 11:59 PM
Question 1 (Mandatory) .25 points
What would be the most likely fair value for Avantek that would make
sense to both Goldman and Kidder around the time period (say between
11:00 and 11:59) when Greg was negotiating with Goldman and Kidder?
Hint: Each market maker’s fair value is usually the mid-point of his bid
and ask prices. There are multiple market makers/dealers for a stock on
the OTC market. Goldman and Kidder are market makers. T. Rowe Price
is a normal trader.
Suppose a market maker believes the true value of a stock is 100. His
bid and ask prices for the stock can be, e.g., 95 and 105. Traders are
going to trade with the market maker at either 95 (sellers) or 105
(buyers). Other traders in the market are going to see a sequence of
transaction prices of, for example, 95, 105, 95, 105, 105… with 95 and
105 randomly showing up on the computer screen. This is because
buyers and sellers randomly arrive at the market and trade with the
market maker. To find market maker’s bid and ask, as well as the fair
value, you need to examine the transaction price history during the time
when T Rowe Price made the phone call. Such information is in the
exhibits at the end of the case.
, A) 24 6/8
B) 24
C) 23 1/2
D) 24 5/8
Question 2 (Mandatory) 0..25 points
What would be the most likely fair value during that period for Tandem that
would make sense to Goldman?
A) 15
B) 15 ¼
C) 15 ½
D) 14 7/8
Attempt 1 of 1
Written Jul 17, 2026 1:09 PM - Jul 18, 2026 1:30 PM
Released Sep 27, 2024 11:59 PM
Question 1 (Mandatory) .25 points
What would be the most likely fair value for Avantek that would make
sense to both Goldman and Kidder around the time period (say between
11:00 and 11:59) when Greg was negotiating with Goldman and Kidder?
Hint: Each market maker’s fair value is usually the mid-point of his bid
and ask prices. There are multiple market makers/dealers for a stock on
the OTC market. Goldman and Kidder are market makers. T. Rowe Price
is a normal trader.
Suppose a market maker believes the true value of a stock is 100. His
bid and ask prices for the stock can be, e.g., 95 and 105. Traders are
going to trade with the market maker at either 95 (sellers) or 105
(buyers). Other traders in the market are going to see a sequence of
transaction prices of, for example, 95, 105, 95, 105, 105… with 95 and
105 randomly showing up on the computer screen. This is because
buyers and sellers randomly arrive at the market and trade with the
market maker. To find market maker’s bid and ask, as well as the fair
value, you need to examine the transaction price history during the time
when T Rowe Price made the phone call. Such information is in the
exhibits at the end of the case.
, A) 24 6/8
B) 24
C) 23 1/2
D) 24 5/8
Question 2 (Mandatory) 0..25 points
What would be the most likely fair value during that period for Tandem that
would make sense to Goldman?
A) 15
B) 15 ¼
C) 15 ½
D) 14 7/8
