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Alex purchased 150 shares of an exchange traded fund (ETF) specializing in consumer staples for $125.24 per share. Alex is comfortable holding on to his
Alex purchased 150 shares of an exchange traded fund (ETF) specializing in consumer staples for $125.24 per share. Alex is comfortable holding on to his shares in the face of minor fluctuations, but does not want to risk the share value falling far below his purchase price. He therefore considers placing a order so that all 150 shares would be sold if the share price falls to $120.00. The following graphs depict two hypothetical paths for the share value of Alex's ETF over the course of the next six months. Complete the sentences below each graph to describe what would happen if Alex placed the preceding order under each of the two circumstances. SHARE VALUE SHARE VALUE 150 150 140 140 130 130 120 120 110 110 100 100 0 1 4 5 6 1 2 3 4 5 6 MONTHS IN FUTURE MONTHS IN FUTURE In the preceding scenario, his order would be activated In the preceding scenario, his order would be activated and executed at and executed at ; thus the order would ; thus the order would over the over the six month period. six month period. True or False: If instead the stock price had risen steadily and never fallen below $120.00, placing the order would have acted as a safeguard but would have had no real effect. True False OO Alex purchased 150 shares of an exchange traded fund (ETF) specializing in consumer staples for $125.24 per share. Alex is comfortable holding on to his shares in the face of minor fluctuations, but does not want to risk the share value falling far below his purchase price. He therefore considers placing a order so that all 150 shares would be sold if the share price falls to $120.00. The following graphs depict two hypothetical paths for the share value of Alex's ETF over the course of the next six months. Complete the sentences below each graph to describe what would happen if Alex placed the preceding order under each of the two circumstances. SHARE VALUE SHARE VALUE 150 150 140 140 130 130 120 120 110 110 100 100 0 1 4 5 6 1 2 3 4 5 6 MONTHS IN FUTURE MONTHS IN FUTURE In the preceding scenario, his order would be activated In the preceding scenario, his order would be activated and executed at and executed at ; thus the order would ; thus the order would over the over the six month period. six month period. True or False: If instead the stock price had risen steadily and never fallen below $120.00, placing the order would have acted as a safeguard but would have had no real effect. True False OO
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