A. Market Orders A stock has been trading at $37.50 per share for some time. It
ID: 2616612 • Letter: A
Question
A. Market Orders A stock has been trading at $37.50 per share for some time. It would make sense for an investor to enter a limit buy order at ______ per share or a limit sell order at ______ per share.
B.Market Orders An investor shorted stock that is currently trading at $55.50 a share. She is now worried about taking losses from an unfavorable price move, although she is not yet ready to close out the position. It may make sense for the investor to enter a ______________ order at ______ per share.
stop buy; $57.00
stop loss; $53.00
stop buy; $53.00
stop loss; $57.00
A. Market Orders A stock has been trading at $37.50 per share for some time. It would make sense for an investor to enter a limit buy order at ______ per share or a limit sell order at ______ per share.
B.Market Orders An investor shorted stock that is currently trading at $55.50 a share. She is now worried about taking losses from an unfavorable price move, although she is not yet ready to close out the position. It may make sense for the investor to enter a ______________ order at ______ per share.
stop buy; $57.00
stop loss; $53.00
stop buy; $53.00
stop loss; $57.00
Explanation / Answer
A.
Less than $37.50 and more than $37.50
B.
Stop loss ; $53
A stop-loss order is an order placed with a broker to sell a security when it reaches a certain price. Stop loss orders are designed to limit an investor’s loss on a position in a security. Although most investors associate a stop-loss order with a long position, it can also protect a short position, in which case the security gets bought if it trades above a defined price.
Thanks