5. Answer the following question using this order book:

Order Book Example

Buy Orders (Bids) Sell Orders (Asks)

Amount Price Amount Price

63 $42.15 3 $42.16

36 $42.12 68 $42.22

112 $41.99 113 $42.25

3 $41.88 9 $42.44

What is the spread for this security after an investor submits a sell order for 185 shares at $41.87?

$0.17 $0.01 $0.28 $0.29

6. Decide whether Company A is a buy or sell depending on the following information:

Company A:

P/E Ratio: 8.12x

Share Price: $29.08

Comparable Company Analysis

Company P/E Ratio

Company B 7.3x

Company C 6.8x

Company D 5.3x

Company E 5.5x

Company F 15.2x

DCF Analysis

Intrinsic value of Company A is $28.91.

Buy Hold Inconclusive Sell

7. Why might an investor pursue a shorting strategy against the airline industry? Select all that apply.

Anticipates airline stock values will decrease Anticipates airline stock values will increase Hedge a current investment The airline industry has high dividend yields

8. Choose the investment strategies which each investor is most likely to pursue.

Investor B believes the market will go up more than down, and plans to buy more if it dips again Investor D believes the market will go down more than up Investor C believes the market won't fluctuate much and has a long time horizon Investor A believes company A (financial sector) is undervalued, but company B (financial sector) is overvalued

Long Strategy Short Strategy Buy-and-Hold Strategy Long-and-Short Strategy

9. An investor planning to retire in two years and cash out his portfolio should pursue what type of investment strategy?

Shorting strategy Capital preservation Market timing Invest in growth stocks