A specialist's limit order book shows the following buy limit orders for PQR stock: 200 shares at $50.10, 500 shares at $50.05, and 300 shares at $50.00. A market order to sell 600 shares of PQR arrives. How will it be filled?

Why D — 200 shares at $50.10 and 400 shares at $50.05

Buy limit orders on the book are filled in price-time priority, meaning the highest-priced buy orders are matched first. The incoming sell market order of 600 shares is first matched against the 200 shares at $50.10 (the highest bid), then 400 of the 500 shares at $50.05 (the next highest bid). This leaves 100 shares remaining at $50.05 and 300 shares at $50.00 on the book. Price-time priority ensures fair and orderly markets by rewarding buyers willing to pay higher prices.