Question

# So I am having a really hard time on my investments homework. I would be grateful...

So I am having a really hard time on my investments homework. I would be grateful to just see examples like these so that I understand how to do them. My textbook is no help.

2.         XYZ stock traded last at \$30.00 per share.

1. Provide an example of a buy limit order that you might place, and indicate how it would work.

b.    Suppose you bought XYZ's stock at \$30.00 per share. Explain the stop order that you would place if you wanted to limit any loss in XYZ to a maximum of \$5 per share.

a. Given XYZ last traded price is \$30 per share

A limit order is an order to buy or sell a stock at a specific price or better. A buy limit order can only be executed at the limit price or lower, and a sell limit order can only be executed at the limit price or higher.

So, let say I want to purchase this share at \$29. Hence, I would place a limit order of \$29 that is when prices reaches \$29 my order will get executed.

b. Suppose you bought XYZ's stock at \$30.00 per share. Explain the stop order that you would place if you wanted to limit any loss in XYZ to a maximum of \$5 per share.

So a stop order at \$25 will limit loss to maximum of \$5. This order will get executed if share price drops to \$25. If the order gets executed when price drops to \$25 my maximum loss would cut down tro \$5 per share.

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