MT483 Unit 2 Order Types and Margin Exercise Example

Course	MT483 Investments
Unit	Unit 2
Paper type	Trading mechanics exercise
Length	About 970 words, 6 pages double-spaced
Format	APA 7 student paper
School	Purdue University Global
Program	BS in Business Administration
Updated	October 2026

Free sample paper for MT483 Unit 2

One Book, Four Orders: An MT483 Unit 2 Trading Mechanics Exercise on Market, Limit, Stop and Margin Trades

[Student Name]

Purdue University Global

MT483: Investments

Unit 2 Trading Mechanics Exercise

[Instructor Name]

[Date]

The order book, the stock and the investor are composite; the sources cited are real.

What this part is doingStating the cost of each order type against a named reference point shows the fills were computed, not described.

The Book as Supplied

The exercise uses a composite stock and a single snapshot of its order book, held fixed so that every order meets identical conditions. Sellers are offering 300 shares at $48.25, 500 at $48.28, 1,000 at $48.35 and 2,000 at $48.50. Buyers are bidding $48.18 for 400 shares, $48.15 for 700 and $48.05 for 1,500. The best bid and best offer are $48.18 and $48.25, so the quoted spread is 7 cents and the midpoint is $48.215. The investor, Kevin Brooks, wants 800 shares. Bodie et al. (2024) describe the order book as the queue of limit orders that every other order type trades against, and this exercise treats it that way: an order can only take what the book holds.

Part One: The Market Order

A market order to buy 800 shares takes the best offers in sequence until it is filled. The first 300 shares come from the $48.25 level, costing $14,475. The remaining 500 come from the next level at $48.28, costing $24,140. The total is $38,615, an average of $48.269 a share. Measured against the best offer alone, the order paid $15 more than 800 shares at $48.25 would have cost. Measured against the midpoint, a fair estimate of the stock's value at that moment, it paid $43 more, about 5.4 cents a share.

That $43 is the price of certainty: the market order guaranteed the shares but not the price.

The calculation shows why averaging at the best offer is a mistake. Only 300 shares were available there, so the larger order had to reach the next level. Harris (2003) calls this the cost of demanding immediacy: traders who want to trade now pay those who wait in the book.

What this part is doingTying the $43 to the midpoint shows the cost is measured, not assumed.

Part Two: The Limit Order

A limit order to buy 800 shares at $48.22 cannot execute, because no seller is offering that low. Instead it joins the book as the new best bid, 4 cents above the old one, and the quoted spread narrows to 3 cents. If a seller later came down to $48.22, Kevin would pay $38,576 for the 800 shares, $39 less than the market order. Recorded at this snapshot, though, the fill is zero shares. Non-execution has its own cost. If the stock rose to $49 before any seller came down, Kevin would either chase it or miss the trade entirely. Biais et al. (1995) found that limit orders cluster at the best quotes and that traders submit more of them when the spread is wide, which is the trade-off this part illustrates: a better price in exchange for the risk of no fill.

Part Three: The Stop Order

The third scenario assumes Kevin already owns the 800 shares and places a stop order to sell at $44 to limit a loss. Overnight, the company cuts its forecast, and the stock opens at $41.10 without trading at any price in between. The stop is triggered because the price has passed $44, and it then becomes a market order to sell, executing at the opening print of $41.10. Kevin receives $32,880 rather than the $35,200 the stop level implied, $2,320 less. A stop does not guarantee its price; it guarantees only that a sell order will be sent once the price is reached.

A stop-limit order with a $44 stop and a $43.50 limit would behave differently. It too would trigger at the open, but as a limit order to sell at no less than $43.50, and with the stock trading at $41.10 it would not fill at all. Kevin would still own the shares, now worth $32,880, and the choice between the two orders is a choice between a certain exit at an unknown price and a known price with no certain exit.

Part Four: Buying on Margin

The last part finances the original $38,615 purchase at 50 percent initial margin, the requirement Regulation T sets for most stocks, so Kevin puts up $19,307.50 and borrows the same amount. A margin call occurs when his equity, the value of the shares minus the loan, falls below the maintenance percentage of the shares' value. Writing the condition for a price P, equity is 800P minus $19,307.50, and the call comes when that equals the maintenance share of 800P. Under the broker's 30 percent house rule, P equals $19,307.50 divided by 560, or $34.48. Under the 25 percent minimum that FINRA rules require, P equals $19,307.50 divided by 600, or $32.18.

Borrowing magnifies results in both directions. Assume a margin rate of [9.5] percent and a three-month holding period, so interest is about $458.55. A 15 percent rise adds $5,792.25 to the position; after interest, Kevin gains $5,333.70 on his $19,307.50, or 27.6 percent. A 15 percent fall costs the same $5,792.25, and with interest the loss is $6,250.80, or 32.4 percent of his equity. The interest makes the loss larger than the gain for a move of the same size.

What the Four Parts Show

Each order type trades one risk for another. The market order bought certainty of execution for $43. The limit order sought a better price and accepted the chance of no trade. The stop sought a known exit and found it did not control the price in a gap. Margin doubled exposure for half the cash and added a loan cost that works against the investor in every scenario. Zero commission removes none of these costs, because the spread, the depth of the book and the interest are all still paid.

What this part is doingClosing on the trade-off each order makes shows the exercise is about costs, not definitions.

References

Biais, B., Hillion, P., & Spatt, C. (1995). An empirical analysis of the limit order book and the order flow in the Paris Bourse. The Journal of Finance, 50(5), 1655-1689. https://doi.org/10.1111/j.1540-6261.1995.tb05192.x

Bodie, Z., Kane, A., & Marcus, A. J. (2024). Investments (13th ed.). McGraw Hill.

Harris, L. (2003). Trading and exchanges: Market microstructure for practitioners. Oxford University Press.

The Purdue Global MT483 Unit 2 instructions

The second MT483 assignment hands you an order book, or has you invent one, and then send one trade through it as different order types. For a market order, fill the shares level by level and report the average price and its cost against a stated reference such as the midpoint. A limit order needs its effect on the book and whether anything executed. A stop requires a scenario, often a price gap, showing what the investor actually receives, and a stop limit is a useful contrast. Margin work asks for the loan, the price that triggers a maintenance call and the gain or loss on equity for a given move, with interest included. Name the margin rules you use and their source. Keep the trade size fixed throughout so the order types are compared on equal terms.

How the MT 483 Unit 2 example is put together

The book is printed once with four offer levels and three bid levels and never changes. Part one fills 800 shares across two offers and prices the $43 premium as the cost of certainty, with a note tying it to the midpoint. Part two posts the limit at $48.22, narrowing the spread to 3 cents, and states what non-execution could cost if the stock climbs. Part three gaps the stock from above $44 to $41.10 overnight and contrasts the stop with a stop limit that never trades. Part four writes the maintenance condition as an equation, solves it for both 30 and 25 percent, and shows a 15 percent move becoming a 27.6 percent gain or a 32.4 percent loss on equity after three months of interest.

MT483 Unit 2 rubric: what earns full points

The largest share of credit in this exercise rests on fills computed against the book as given. A market order averaged at the best offer, as if every share were available there, is the commonest arithmetic loss, and graders usually check it first. Limit orders shown as filled with no seller at that price suggest the book was not read. Stop orders described as locking in a price lose points because a gap disproves the claim. On margin, the call price must use the maintenance percentage and the loan together, and returns on equity need interest subtracted. Costs earn credit only when each is measured from a stated reference, so the midpoint or best offer should be named beside every dollar figure. Sources for Regulation T and exchange mechanics complete the work in APA format.

MT483 Unit 2 help: mistakes that cost points

Many submissions define each order type correctly and never apply the definitions to numbers, which leaves the exercise unfinished. Others change the trade size between parts, so differences in cost could come from size rather than from order type. A frequent margin error divides the loan by the share count and calls the result the call price, skipping the maintenance requirement altogether. Leaving out margin interest makes borrowed gains and losses look symmetric when they are not. Students also report zero commission as zero cost, ignoring the spread and the depth of the book. Before submitting, recompute one fill by hand from the book, solve the call price from the equity equation, and confirm that every cost sentence names what it is measured against.

Get an MT483 Unit 2 example written to your instructions

Order books, share counts and margin rules differ between prompts. Forward the numbers your Unit 2 exercise gives, plus the rubric; the free first MT483 exercise lands within 24-48h, each fill computed level by level, costs measured from a named reference point and any margin call solved under the rules your section sets. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.

More MT483 papers and BS in Business Administration samples

MT483 Unit 2 questions, answered

Should I use a real stock's order book?

If the prompt asks for one, a screenshot or a level-two quote from a named platform and date works, cited as such. A composite book, as here, keeps the arithmetic clean and lets every order meet identical conditions. Either way, state the book before placing any order, so the grader can check each fill against it.

What margin percentages should the exercise use?

Use whatever the prompt specifies. Otherwise, the Federal Reserve's Regulation T sets 50 percent initial margin for most stocks, FINRA sets a 25 percent maintenance minimum, and many brokers apply a higher house requirement. Name the source of each figure and show the call price under each rule you mention.

Do trading costs belong in the exercise?

Yes, even when commissions are zero. The spread, the price impact of walking the book and margin interest are all costs, and graders reward measuring them against a stated reference point. A short line explaining that zero commission does not mean zero cost usually strengthens the analysis considerably.

Where can I find a free MT483 Unit 2 sample paper?

The complete MT483 Unit 2 exercise is on this page: one 800-share trade sent through a composite book as market, limit and stop orders, plus a margin purchase with its call price solved.

Why does the stop order in the MT483 Unit 2 sample fill at $41.10 instead of $44?

A stop becomes a market order once triggered, and the stock opened below $44 without trading in between, so the order sold at the first available price.