For schweser 19.3 vol practice exam one they use the execution prices of the buys to get the VWAP and then compare that to the average for the trader and state that your hope is that the traders average cost is less then the VWAP if you are buying. Why the hell are they using the execution prices instead of the ask prices? If you use the execution prices, the VWAP and your VWAP will be the same. To calc the VWAP (if nothing is specified) what should we use bid,ask, execution, avg. of bid ask?
s23dino Wrote: ------------------------------------------------------- > For schweser 19.3 vol practice exam one they use > the execution prices of the buys to get the VWAP > and then compare that to the average for the > trader and state that your hope is that the > traders average cost is less then the VWAP if you > are buying. Why the hell are they using the > execution prices instead of the ask prices? If > you use the execution prices, the VWAP and your > VWAP will be the same. To calc the VWAP (if > nothing is specified) what should we use bid,ask, > execution, avg. of bid ask? ALL execution prices, not only by this particular trader
ahhh that makes sense but why the heck does schweser have a problem that only has one traders execution prices and then imply you would compare this VWAP to the traders VWAP. It’d be the same with the data they provided. anyhow thanks csk.
You would compare the trader’s execution price with the overall VWAP for the day. If the trader’s execution price is lower, it “seems” like he did well, even if he really didn’t. You can also compute a trader’s VWAP and compare it to the overall VWAP (all traders’ transactions) or any other price measurement to see if the trader did well. I think the first scenario is more likely for the exam.
What do you mean by the first scenario the overall vwap that is different then the second overall VWAP (all traders transaction)?
The overall VWAP is the same in both scenarios. I meant to type that. The overall VWAP would be the VWAP for all trades on a security. If a trader could get a price lower than the VWAP, it would look like he got a good trade.
yea agreed I just think this is a crappy schweser question, but it makes sense.