If an investor places a sell order with a stop price. When the stop price occurs, the order will be executed as a market order at the dealer's next available bid price. Group of answer choices True False
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- Describe a situation when an investor would want to use a market order.Explain how the dealer market works. Be sure to mention market makers, bid and ask prices, the Nasdaq market, and the OTC market.If you transmit a market buy order to the stock exchange, will you buy at the bid or the ask? a. Ask b. Bid
- Graphically show a covered call options strategy, including payoff. Explain why an investor mayuse this option strategy.What is the role played by the clearinghouse if you are seller of a put optiona. Explain the covered call options strategy b. Graphically show a covered call options strategy, including payoff. Explain why an investor mayuse this option strategy.c. Using put-call parity, explain the shape of the payoff line (in part (a) of this question). Whatoption position does it look like and why?
- Do buyers of call options have to post margin? Why is this?Which of the following statements is false? A. Historical VaR simulation involves using past data as a guide to what will happen in the future. B. Illiquidity is observed when there is a large difference between the offered sale price and the bid price. C. Yield spared is reflected in the size of the bid-ask spreads. D. The stressed VaR is based on how market variables have moved during a particularly adverse time period.Describe the following in placing purchase or sale orders in the stock market: Market Limit Stop Stop Limit Give an example of each.
- If an investor places a market order, the stock will be sold if its price falls to the stipulated level. If an investor places a limit order, the stock will be bought if its price rises above the stipulated level.Assume you want to test the Efficient Market Hypothesis (EMH) by comparing alternative trading rules to a buy-and-hold policy. Discuss the three common mistakes that can bias the results against the EMH.If you want to buy a particular stock but are worried thatdemand from investors could push the price to an unreasonably high level before yourorder is executed, what type of order would you specify? Why?