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***This is a template. Please type over/delete all items in red prior to submitting your assignment. Week 7 Homework: Definitions By Type Your Name Here FIN100: Principles of Finance Enter the Name of...

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Week 7 Homework: Definitions
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FIN100: Principles of Finance
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uary 10, 2020)
Week 7 Homework
Instructions: Please respond to the following questions:
1. Describe the differences among the following three types of orders: market, limit, and stop loss. Provide examples of each in your own words.
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2. What is a short sale? Provide an example in your own words.
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3. Describe buying on margin. Provide an example in your own words.
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4. Why is it illegal to trade on insider information? Provide an example in your own words.
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finance-week7investmentstemplate-kd1mq2pc.docx
Answered Same Day Nov 18, 2021

Solution

Neenisha answered on Nov 18 2021
147 Votes
Three types of Orders
1. TYPES OF ORDERS
Market Orders
These are the orders which are bought or sold at market price. These are the good options if one is sure about the stock price and want to execute the order immediately. There is no guarantee that the order will be executed at a same price. These are generally placed during the market hours.
Ex. If the trader wants to sell the future contracts of cu
ency immediately in the market, then he would call the
oker and get the order executed in best possible market price immediately.
Limit Orders
These are the orders where the maximum price which is to be paid is fixed and the minimum price to be received it also fixed. Therefore, it sets the limit on the amount to be paid and received. The order gets executed only when the stock reached the limit price or the price is better.
Ex. If the gold future contracts are trading at $ 397 per ounce and trader enters into the limit order where the maximum price set is $ 392 per ounce. Therefore, the order will only be executed when the price reaches as low as $ 392, otherwise it will not be executed.
Stop Loss
These are the orders where the stop loss or stop price is set by the trader. Once the stock reaches the stop loss or stop price, the order is executed...
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