Which options should the broker suggest

Assignment Help Finance Basics

Reference no: EM131923183

Question: You are an individual investor on the phone with your broker discussing a potential purchase of 10 round lots of stock (a long position) issued by what you believe is a sound corporation with growth potential. You express concern that today's stock price is about $1.50 per share higher than what you would like to pay. Which of the following options should the broker suggest to address your concern?

A. Buy the stock on margin because margin provides leverage that offers the potential to gain more on a percentage basis than a cash purchase. The added leverage and potentially greater gain may compensate for the higher cost.

B. When the stock price begins its decline, place a market order. By timing the purchase in this manner, the investor can increase the chances of narrowing the premium the market requires at the current price.

C. Enter a stop order to protect price movement above and away from your target purchase price.

D. Enter a limit order, thereby creating a market order only when the stock price is at or below the limit price.

Reference no: EM131923183

Questions Cloud

Determining the electromagnetic spectrum : Why is the prefix "micro" used to describe "microwaves" on the electromagnetic spectrum?

Prepare a spreadsheet analysis : You have been asked to prepare a spreadsheet analysis and to calculate NPV, IRR, profitability index, and payback period.

Provide an executive summary for the strategic management : Provide an executive summary for the strategic management and market analysis report for Johns Hopkins Hospital.

What is the meaning of b-to-b and c-to-b in e-commerce : Provide three drawbacks that would probably cause prospective users to be a bit sceptical about using it.

Which options should the broker suggest : You are an individual investor on the phone with your broker discussing a potential purchase of 10 round lots of stock (a long position) issued.

Could the firm expel her without liability : A partner in the Washington, D.C., office of Butler & Binion, Colletter Bohatch received internal firm reports about billing.

Magnitude of the magnetic field inside the solenoid : If the cross-sectional radius of the solenoid were decreased by a factor of 2, what is the magnitude of the magnetic field inside the solenoid?

How do you prove the given problem : You are faced with the last days of a computer conversion and you are receiving calls that people have paid their bills, yet were not being credited.

How the fed lowers and raises the federal funds rate : How does financial intermediation often provide a better alternative to direct financing between surplus and deficit units?

User Account

All Pages