Sally Has Researched GLE and Wants to Pay No More

question 22

Multiple Choice

Sally has researched GLE and wants to pay no more than $50 for the stock. Currently, GLE is trading in the market for $54. Sally would be best served to:

• A)buy using a limit order.
• B)buy using a market order.
• C)use the bid-ask spread to her advantage.
• D)None of these.

Grasp the relationship between par value, offering price, and capital in excess of par.

Identify the characteristics and advantages of different types of stocks, including preferred and common stocks.

Differentiate between various market values and their implications for stock and bond trading.

Recognize the unique features and risks of different bond types, including floating-rate, junk, and secured bonds.

---

Definitions:

Risky Projects

Initiatives or investments that have a significant chance of failure or result in negative outcomes but also offer potential high rewards.

Moral Hazard

Moral hazard refers to a situation where one party is more likely to take risks because they do not have to bear the full consequences of their actions, often due to asymmetrical information or a disconnect between action and responsibility.

Fire Prevention Program

A fire prevention program includes strategies and activities aimed at reducing the incidence and severity of uncontrolled fires.

Insurer

A company or entity that provides coverage, typically in the form of compensation resulting from loss, damage, illness, or death, in exchange for premium payments.