Question

You short-sell 600 shares of Rock Creek Fly Fishing Co., now selling for $38 per share. If you want to limit your loss to $3,600, you should place a stop-buy order at ___.A. A. $32.00 B. $38.00 C. $44.00 D. $64.00

Answer 1

Answer:

$44.00

Explanation:

You are required to find where to place a stop-buy order

Amount received from short sale

= 600 x $38

= $22,800

Loss = $3,600 = 600p - 22,800

=3,600 + 22800 = 600p

26400 = 600p

P = 26400/600

P = $44.00

you should place a stop-buy order at $44.00