Explain which order type provides liquidity

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Reference no: EM131972509

1. If every stock has a 50% chance of increasing or decreasing at any given point in time, and you trade randomly, do you expect to break even?

2. You have sold short 500 shares of a stock, which is now trading for an ask/bid of $20.12/$20.10. If you want to limit your losses to 10% from this point, what type of order would you submit to the exchange? Does this guarantee you won’t lose more than 10%?

3. Explain what happens when you short a stock (what does your broker do)?

4. Define liquidity and explain which order type (market or limit) provides liquidity.

Reference no: EM131972509

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