Question: a imagine that you have placed a limit order to...
(a) Imagine that you have placed a limit order to 100 shares of Sallisaw Tool at a price of $38, although the stock is currently selling for $41. Discuss the consequences, if any, of each of the following situations.
(i) The stock price drops to $39 per share two months before cancellation of the limit order.
(ii) The stock price drops to $38 per share
(iii) The minimum stock price achieved before cancellation of the limit order was $38.50. When the limit order was cancelled, the stock was selling for $47.50 per share.
(b) You have been researching a stock that you like, which is currently trading at $50 per share. You would like to buy the stock if it were a little less expensive –say, $47 per share.
You believe that the stock price will go to $d70 by year and then level off or decline. You decide to place a limit order to buy 100 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 stock price, and it goes straight to $75. What is your current position?