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Market Making/●●●●

Quoting to a target percentage margin

You're making a market on something you value at **\200,andyouwanta**, and you want a **1%marginoneachside,thatis,youllbuymargin** on each side, that is, you'll buy1%belowfairandsellbelow fair and sell1%$ above.

Where do you place your bid and ask, and what is the resulting spread in dollars and percent?

Your answer

This one is open-ended. Work it through, then check your reasoning against the full solution.

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