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Essentials Of Investments
Found in: Page 82
Essentials Of Investments

Essentials Of Investments

Book edition 9th
Author(s) Zvi Bodie, Alex Kane, Alan Marcus, Alan J. Marcus
Pages 748 pages
ISBN 9780078034695

Short Answer

: If you place a stop-loss order to sell 100 shares of stock at $55 when the current price is $62, how much will you receive for each share if the price drops to $50?

a. $50

b. $55

c. $54.87

d. Cannot tell from the information given

Answer: b

See the step by step solution

Step by Step Solution

Step 1: Definition

The purchase or sale of a stock at a specified price to stop loss is called the stop-loss order.

Step 2: Explanation

Answer: b – When the price drops to $50, the stop-loss order will be executed, where the stocks would only be sold for $55 per share. Therefore the correct answer is option ‘b’.

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