Mid, last trade, or microprice, which is fair value?
You need a single number for a stock's fair value. Three candidates are on offer: the mid (average of best bid and ask), the last-traded price, and the microprice (size-weighted touch).
Rank them as fair-value proxies. When does the last-traded price mislead you most?
Show a hint
The last trade is a record of the past; the touch is a set of live, standing options to trade right now. Which is more current? And which accounts for size?
Your answer
This one is open-ended. Work it through, then check your reasoning against the full solution.