Which of the Following Orders Is Most Useful to Short

question 56

Multiple Choice

Which of the following orders is most useful to short sellers who want to limit their potential losses?

• A)Limit order
• B)Discretionary order
• C)Limit-loss order
• D)Stop-buy order
• E)None of the above

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Definitions:

Exercise Price

The price at which the holder of an option contract can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Stock Price

The cost of purchasing a share of a company, reflecting the company's current market valuation.

Expected Dividends

The dividends that shareholders anticipate receiving on their investments in a corporation, based on past dividends and the company's current profitability.

Time Value

The additional amount an investor is willing to pay for an option or other financial product based on its potential to increase in value over time.