(a)Imagine that you have placed a limit order to 100 shares ofSallisaw Tool at a price of $38, although the stock is currentlyselling for $41. Discuss the consequences, if any, of each of thefollowing situations.
(i) The stock pricedrops to $39 per share two months before cancellation of the limitorder.
(ii) The stock pricedrops to $38 per share
(iii) The minimumstock price achieved before cancellation of the limit order was$38.50. When the limit order was cancelled, the stock was sellingfor $47.50 per share.
(b)You have been researching a stock that you like, which is currentlytrading at $50 per share. You would like to buy the stock if itwere a little less expensive âsay, $47 per share.
You believe that thestock price will go to $d70 by year and then level off or decline.You decide to place a limit order to buy 100 shares of the stock at$47 and a limit order to sell it at $70. It turns out that you wereright about the direction of the stock price, and it goes straightto $75. What is your current position?
(a)Imagine that you have placed a limit order to 100 shares ofSallisaw Tool at a price of $38, although the stock is currentlyselling for $41. Discuss the consequences, if any, of each of thefollowing situations.
(i) The stock pricedrops to $39 per share two months before cancellation of the limitorder.
(ii) The stock pricedrops to $38 per share
(iii) The minimumstock price achieved before cancellation of the limit order was$38.50. When the limit order was cancelled, the stock was sellingfor $47.50 per share.
(b)You have been researching a stock that you like, which is currentlytrading at $50 per share. You would like to buy the stock if itwere a little less expensive âsay, $47 per share.
You believe that thestock price will go to $d70 by year and then level off or decline.You decide to place a limit order to buy 100 shares of the stock at$47 and a limit order to sell it at $70. It turns out that you wereright about the direction of the stock price, and it goes straightto $75. What is your current position?
