1. What type of order should you give your broker if you want to buy shares of FedEx to diversify your portfolio. You believe the share price is near its “fair value”, and you want the trade done quickly.
a. Market Order
b. Limit Order (Buy)
c. Limit Order (Sell)
d. Stop Order
e. Stop-Limit Order
2. What type of order should you give your broker if you want to buy shares of FedEx, but you believe that the current price is too high given the firm’s prospects. If the shares could be obtained at a price of 5% lower than the current value, then you would like to buy shares for your portfolio.
a. Market Order
b. Limit Order (Buy)
c. Limit Order (Sell)
d. Stop Order
e. Stop-Loss Order
3. What type of order should you give your broker if you plan to purchase a car sometime in the next few months and will sell your shares of Intel to provide the funds for your down payment. While you believe that the share price of Intel is going to rise over the next few weeks, if you are wrong and the price drops suddenly, you will not be able to afford the purchase. Thus, you want to hold on to the shares for as long as possible, but still protect yourself against the risk of a big loss.
a. Market Order
b. Limit Order (Buy)
c. Limit Order (Sell)
d. Stop Order
e. Stop-Limit Order