This is a limit order. She want to try to sell right now, but only in a certain price range for execution. The order will reach the floor right away and the order will be executed if the price of GE is $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.
This is a stop order. The order will turn into a market order ("sell....at the market price") if the price falls to the stop of $10 per share.2. Consider short selling.
Investors that believe the price of the stock will fall soon and wish to profit from this price movement.b) What restrictions are imposed on short sales? Why do we have these restrictions?
Short sales, if left unrestricted, could destabilize markets: If the price of a stock is falling and people are allowed to short sell, this drives the price down further. So there are tick-test rules that determine if a short sale will be allowed. Short sales are allow only if there has been an uptick or a zero uptick on the previous trade, i.e. the stock price has been rising or constant.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.
The S&P 500 measures the performance of only 500 stocks, but these are the stocks of companies considered industry leaders so they are relatively large in terms of market capitalization. Which 500 stocks are included? The private company, Standard & Poors makes this decision.The Wilshire 5000 index measures the performance of all public traded stocks (about 5000) of all sizes. So the criteria for inclusion here is objective: if the stock is publicly traded, then it is tracked in the index.