8. Hawkeye Inc. stock has a Bid at $39.95 and an Ask at $40.05.You have placed a

ID: 2797545 • Letter: 8

Question

8. Hawkeye Inc. stock has a Bid at $39.95 and an Ask at $40.05.You have placed a Stop Loss (“stop-loss”) order to sell at $40.

What are you telling your broker?

a. Telling broker to sell at $40 to avoid further downside loss.

b. Telling broker to buy more at $40

Given the market prices, will your order be executed

a. Trade would be executed when another trade has been executed at $41 or more, at which time, your Stop-loss order becomes a market order to buy.

b. Trade would be executed when another trade has been executed at $40 or less, at which time, your Stop-loss order becomes a market order to sell.

Stop loss order is to restrict loss.

a. Telling broker to sell at $40 to avoid further downside loss.

b. Trade would be executed when another trade has been executed at $40 or less, at which time, your Stop-loss order becomes a market order to sell.

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