Arianna just made another fantastic investment: She purchased 400 shares in Great Gains Corporation for $31.5831.58 per share. Yesterday the stock closed at $86.2986.29 per share. In order to lock in her gains, she has decided to employ a stop-loss order. Assuming she set the order at $85.8185.81, what is likely to happen? Why might this not be a wise decision? At what price would you recommend setting the stop-loss order? Why? Question content area bottom Part 1 In order to lock in her gains, she has decided to employ a stop-loss order. Assuming she set the order at $85.8185.81: (Select the best answer below.) A. It is unlikely that the position will be sold as the stock fluctuates around its closing price. B. There is not enough information to answer this. C. It is likely that the position will be sold as the stock fluctuates around its closing price. Your answer is correct. Part 2 At what price would you recommend setting the stop-loss order? (Select the best answer below.) A. You should set your stop-loss order to safeguard against a major, not minor, fluctuation. A stop-loss price of $94.5394.53 might be a more appropriate use of the selling technique. B. You should set your stop-loss order to safeguard against a major, not minor, fluctuation. A stop-loss price of $78.2378.23 might be a more appropriate use of the selling technique. C. You should set your stop-loss order to safeguard against a minor, not major, fluctuation. A stop-loss price of $85.8685.86 seems appropriate use of the selling technique.
Arianna just made another fantastic investment: She purchased 400 shares in Great Gains Corporation for $31.5831.58 per share. Yesterday the stock closed at $86.2986.29 per share. In order to lock in her gains, she has decided to employ a stop-loss order. Assuming she set the order at $85.8185.81, what is likely to happen? Why might this not be a wise decision? At what price would you recommend setting the stop-loss order? Why? Question content area bottom Part 1 In order to lock in her gains, she has decided to employ a stop-loss order. Assuming she set the order at $85.8185.81: (Select the best answer below.) A. It is unlikely that the position will be sold as the stock fluctuates around its closing price. B. There is not enough information to answer this. C. It is likely that the position will be sold as the stock fluctuates around its closing price. Your answer is correct. Part 2 At what price would you recommend setting the stop-loss order? (Select the best answer below.) A. You should set your stop-loss order to safeguard against a major, not minor, fluctuation. A stop-loss price of $94.5394.53 might be a more appropriate use of the selling technique. B. You should set your stop-loss order to safeguard against a major, not minor, fluctuation. A stop-loss price of $78.2378.23 might be a more appropriate use of the selling technique. C. You should set your stop-loss order to safeguard against a minor, not major, fluctuation. A stop-loss price of $85.8685.86 seems appropriate use of the selling technique.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Arianna just made another fantastic investment: She purchased 400 shares in Great Gains Corporation for
$31.5831.58
per share. Yesterday the stock closed at
$86.2986.29
per share. In order to lock in her gains, she has decided to employ a stop-loss order. Assuming she set the order at
$85.8185.81,
what is likely to happen? Why might this not be a wise decision? At what price would you recommend setting the stop-loss order? Why?Question content area bottom
Part 1
In order to lock in her gains, she has decided to employ a stop-loss order. Assuming she set the order at
$85.8185.81:
(Select the best answer below.)It is unlikely that the position will be sold as the stock fluctuates around its closing price.
There is not enough information to answer this.
It is likely that the position will be sold as the stock fluctuates around its closing price.
Part 2
At what price would you recommend setting the stop-loss order? (Select the best answer below.)
You should set your stop-loss order to safeguard against a major, not minor, fluctuation. A stop-loss price of
$94.5394.53
might be a more appropriate use of the selling technique.You should set your stop-loss order to safeguard against a major, not minor, fluctuation. A stop-loss price of
$78.2378.23
might be a more appropriate use of the selling technique.You should set your stop-loss order to safeguard against a minor, not major, fluctuation. A stop-loss price of
$85.8685.86
seems appropriate use of the selling technique.AI-Generated Solution
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