What would average market maker fair value

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Harvard Business School Case: T Rowe Price Case Questions
1. What would average market makers' fair value for the two stocks at the moment when trading happened? Each market maker's fair value is usually the mid-point of his bid and ask prices. There are usually multiple market makers/dealers for a stock on the OTC market.
2. Using the average market makers' fair value in Question 1 as a benchmark, please do a transaction cost analysis for T Rowe Price. How much direct transaction cost would Greg incur relative to the fair value if he sold to Kidder? Here, direct transaction cost refers to the compensation paid to a market maker for his/her market making service.
3. How much direct transaction cost would Greg incur relative to the fair value if he were to accept Michael's terms in CASE A?
4. Kidder provides research for T Rowe Price for nothing. Why they want to do that?
5. Why Greg went to Kidder first instead of Goldman?
6. Can a block be sold in several small lots?
7. Perhaps Michael is just being "greedy". Can Greg walk away if better terms are not forthcoming?
8. Why include Tandem in the deal? Wouldn't that make the deal complicated? In other words, was it a sweetener (more business to Goldman)? Or something more subtle?
9. What is the final transaction cost incurred relative to the fair values of Avantek and Tandem after the traders' negotiation in Case B? Is the trader Greg skillful (in the sense of reducing a nontrivial amount of transaction cost)?
9. What is the basic problem Greg faces in trying to dispose the block of Avantek shares? What advice would you give him if he could do it all over again given you have known what he has done in both Case A and B?

Reference no: EM13681395

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