Question

You purchased Tesla stock at $ 200 per share. If you worry about the stock price...

You purchased Tesla stock at $ 200 per share. If you worry about the stock price drop to a low level, which of the following orders wills you place?

a.limit sell order

b.stop buy order

c.stop sell order.

d.limit buy order.

which of the following indexes is not market value-weighted.

a.The dow jones industrial average

b.Wilshire 500

c.the standard and poor's 500 stock index

d.russell 2000

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Homework Answers

Answer #1

1. Stop sell order

If you are worried about the price of the stock that you own will fall below a certain level i.e. 5% below the current stock price you can place a stop sell order to sell the stock at a predefined price to limit you losses

2. The Dow Jones industrial average

The Dow Jones industrial average is a price weighted index with each share in the index weighed according to their prices.

For Eg.

Stock A = $200

Stock B =  $50

Stock C = $1000

Stock D = $4

Price weighted index = (Stock A + Stock B + Stock C + Stock D) / 4

Price weighted index = ($200 + $50 + $1000 + $4) / 4

Price weighted index = $313.5

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