Business Administration - Financial Planning RFC125 Lecture Notes - Lecture 10: Futures Exchange, Credit Risk, Montreal Exchange

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greenmuskrat329

11 Nov 2016

School

Seneca College

Department

Business Administration - Financial Planning

Course

Business Administration - Financial Planning RFC125

Professor

Peter Wan

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Document Summary

If it happens it trade, if it never drops to 60 the order will be cancelled: any part: Then fill the rest when available when price/shares are available. Same commission of filling in part, commission is for total transaction: aon all or none: Less chances of filling out the order than any part: stop loss: Sell when a price goes down to a certain price: stop buy: Stop buying when it gets to a certain price: cage. Derivatives (page 10-6): based on the performance underlying assets: financial or commodities, contract on the value of a particular stock/contract/index/gold/oil, option: Common one is stock option underlying of stock, stock i(cid:374)de(cid:454), (cid:271)o(cid:374)d i(cid:374)de(cid:454), cad, u d, oil, . Nov option = 3rd saturday of the month, when it expires. When you buy, you have the right to buy it, the seller has the obligation must fulfill the right. When you buy, someone has to be selling. Future has to trade through futures exchange.

Related Questions

QUE

(a) Al Cromwell places a market order to buy around lot of Thomas, Inc., common stock, which is traded on theNYSE and is currently quoted at $50 per share. Ignoring brokeragecommissions, determine how much money will Cromwell probably haveto pay. If he had placed a market order to sell, how much moneywill he probably receive? Explain.

(b) Imagine that you have placed a limit orderto 100 shares of Sallisaw Tool at a price of $38, although thestock is currently selling for $41. Discuss the consequences, ifany, of each of the following situations.

(i) The stock price drops to $39 per share two months beforecancellation of the limit order.

(ii) The stock price drops to $38 per share

(iii) The minimum stock price achieved before cancellation ofthe limit order was $38.50. When the limit order was cancelled, thestock was selling for $47.50 per share.

(c) You have been researching a stock that youlike, which is currently trading at $50 per share. You would liketo buy the stock if it were a little less expensive âsay, $47 pershare.

You believe that the stock price will go to $d70 by year andthen level off or decline. You decide to place a limit order to buy100 shares of the stock at $47 and a limit order to sell it at $70.It turns out that you were right about the direction of the stockprice, and it goes straight to $75. What is your currentposition?

(d) You own 500 shares of Ups &Downs, Inc.,stock. It is currently price at $50. You are going on vacation, andyou realize that the company will be reporting earnings while youare away. To protect yourself against a rapid drop in the price,you place a stop-limit order to sell 500 shares at $40. It turnsout the earnings report was not so good, and the stock price fellto $30 right after the announcement. It did, however, bounce back,and by the end of the day it was back to $42. What happened in youraccount?

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Business Administration - Financial Planning RFC125 Lecture Notes - Lecture 10: Futures Exchange, Credit Risk, Montreal Exchange

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