Explain the Use of Limit Orders and Stop- Loss Orders

question 57

Essay

Explain the use of limit orders and stop- loss orders in rebalancing an investor's share portfolio. What are the principal risks in using these orders?

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Definitions:

Minimum AVC

The lowest point of the average variable cost curve where each unit of production is at its cheapest.

Short Run

A period during which at least one factor of production is fixed, leading to limitations in output adjustment.

Long Run

A period of time in which all factors of production and costs are variable, allowing for full industry adjustment to changes.

Minimum ATC

This refers to the lowest point on the average total cost curve, representing the most efficient scale of operation for a firm.