Donna currently owns a large position in Facebook. She originally purchased the stock at $39.50 per share. However, since the lastpresidential election, she has been concerned about the issues of privacy and risks associated with potential investigations that thecompany is exposed to. The stock is currently near the all-time high again. She is concerned about losing value because she is going ona two-week vacation and will not be able to initiate trades at that time. She would prefer to sell her stock if the price drops to $165.00.What type of trading strategy can she use to protect her gains?O Place a limit order to sell at $165 now.O Place a stop-loss order at $165 now.O Place a price alert to notify you when the stock trades near $165, so you can place a market order.O Place a price alert to notify you when the stock trades near $165, so you can place a limit order.

A limit order is a tool in which an investor can specify the price at which the sell order would be…

Answered: Donna currently owns a large position…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Able owns 100% of ABC Corporation, which operates a restaurant. Able founds the corporation with $1,000 in capital. ABC has its own bank account, and Able does not commingle the corporation's funds with his own. ABC has never had a directors' meeting or a shareholders' meeting. ABC does not employ a bookkeeper, and its financial records are incoherent. ABC operates for six months and does not generate a profit. Shortly thereafter, a customer dies of food poisoning due to contaminated ham served by ABC. Can the customer's estate hold Able personally liable for any judgment rendered against ABC?
A group of environmentalists have purchased shares in a mining company. Some 200 members of the group are now shareholders and holding various amounts of shares. The members of the group who have purchased shares are not against profits being made by their company, but are concerned that appropriate health and safety standards are not implemented by the company, and further that appropriate environmental safeguards are implemented when extracting a mineral, transporting it and manufacturing the final product.What rights do members have to question directors at a meeting regarding the company’s environmental practices?What are the rights of members to actually call an extraordinary meeting in order to discuss a particular environmental issue that has arisen since the last meeting of members was held?
Larry also holds 2,000 shares of common stock in a company that only has 20,000 shares outstanding. The company’s stock currently is valued at $48.00 per share. The company needs to raise new capital to invest in production. The company is looking to issue 5,000 new shares at a price of $38.40 per share. Larry worries about the value of his investment. Larry’s current investment in the company is . If the company issues new shares and Larry makes no additional purchase, Larry’s investment will be worth . This scenario is an example ofdilution . Larry could be protected if the firm’s corporate charter includes apreemptive right provision. If Larry exercises the provisions in the corporate charter to protect his stake, his investment value in the firm will become
Michael has decided to retire from his business and pass the business on to his oldest child, Taylor. He does not want the value of his shares to grow over time. Michael’s shares have an ACB and PUC of $200 and a FMV of $300,000. He plans to use an estate freeze using Section 86. If Michael plans only to take shares as consideration for the exchange, describe the shares that he’ll take as exactly as you can. The type of shares, what happens to their value over time, their attributes such as ACB/PUC/FMV.
Khalil founded the "Taco Factory" 20 years ago as a family-oriented restaurant. Over the years as they grew the business, he incorporated and sold stock to outside investors. Recently the stockholders voted to seek liquor licenses and to sell beer and hard liquor in the restaurants. Khalil opposed this, citing the history of the restaurant's "family" environment, but was voted down. Khalil has experienced which drawback of the corporate form of ownership? The potential for diminished managerial incentives. The inability to accumulate capital. The potential loss of control. Legal requirements and red tape.
Sam owns 1,500 shares of Eagle, Inc. stock that he purchased over 10 years ago for $80,000. Although the stock has a current market value of $52,000, Sam still views the stock as a solid long-term investment. He has sold other stock during the year with overall gains of $30,000, so he would like to sell the Eagle stock and offset the $28,000 loss against these gains—but somehow keep his Eagle investment. He has devised a plan to keep his Eagle investment by using funds in his traditional IRA to purchase 1,500 Eagle shares immediately after selling the shares he currently owns. Evaluate Sam’s treatment of these stock transactions. Can his plan work?
Jake and Alicia are influencers on Instagram. They dated for several years and subsequently broke up. As retaliation, Jake shared disparaging, reckless, and defamatory posts on his Instagram which damaged Alicia's reputation and resulted in a loss of her followers, her collaboration with brands, and ultimately a significant loss of her income. Alicia sued Jake for emotional distress due to the damage to her reputation. Alicia estimated that her lost income due to decline in engagement is $350,000, her reputation prior to the damage was worth $1,000,000 and the expected income from her brand collaborations before it was cancelled was $700,000. Jake settled out of court for $2,000,000. How much is Alicia required to include in income? A) $1,050,000 OB) $0 OC) 950,000 OD) $2,000,000
Jimmy recently graduated from medical school and is working for a hospital system. He is not worried about his medical school debt because it is relatively low compared to his income, but he would like to begin saving and investing for his children's college education, his retirement, and the purchase of a family home. He is also concerned about protecting his family financially if something were to happen to him. Which of the following financial professionals would be the best option for Jimmy? Question 8 options: Stockbroker. Insurance agent. Certified Financial Planner® Accredited Financial Counselor.
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James bought a beachfront house in March 2011 for $140,000. After renting the house out for 3 years, he moved into the house in 2013 and it became his main residence for the next 7 years. He sold the house in March 2021 for $260,000. James has prior year net capital losses of $4,000 and current year capital losses of $6,000 from the sale of shares. What is James' net capital gain for the 2021 income year? a. $26,000 b. $13,000 c. $260,000 d. $120,000
Kimball, a partner in a one-office firm, inherits 15 shares of Spotless Housekeeping Services stock. The stock has a market value of $25 per share; there is a ready market for them; and there are 300,000 shares outstanding. Spotless is an audit client of the firm, and Kimball does no work or consulting for Spotless engagements. Which of the following is CORRECT regarding Kimball receiving this stock and maintaining the firm's independence with Spotless? As long as Kimball does not work on the engagements for Spotless, nothing need be done. If he works on the engagements for Spotless, then the shares must be promptly sold to preserve the firm's independence. Since the shares are worth only $375 and they were inherited, nothing need be done. If Kimball transfers the shares to a blind trust where he is the beneficiary, independence with Spotless will not be impaired. The shares must be sold within 30 days of their receipt.
A4

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