Name: ____________________________

Eco 342 Banking and Financial Markets           Homework #6             Due 5/7/2004

1. For each case below, EXPLAINwhat type of order (market, limit, stop, stop-limit, market if touched) the investor should choose.
a) An investors wishes to sell her shares in General Electric right now, but only if she can get a price of $30 per share or higher.

b) Concerned about the future of the airline industry, an investor wants to sell his Continental Airlines  stock at the market price IF the price falls below $10 per share.

2. Consider short selling.
a) Why would someone want to execute short sale?

b) What restrictions are imposed on short sales?  Why do we have these restrictions?

3. Describe the difference between the S&P 500 and the Wilshire 5000 indexes in terms of what types of stocks are being measures, and how stocks are selected for inclusion in the index.