Explain the use of limit orders and stop-loss orders in rebalancing an investor's stock portfolio. What are the principal risks in using these orders?
What will be an ideal response?
Answer: Limit orders can be used to buy or sell securities. They can ensure that an investor buys only at or below his or her desired purchase price or sells only at or above the desired price. The risk is the order might not be executed. The stop-loss order can be used to limit the downside loss exposure of an investment, or to protect a profit. The principal risk is whipsawing—where a stock temporarily drops then bounces back up after an investor has sold it at the low price.
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The owner of a condominium unit also owns the common elements in joint tenancy with the
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If a coin is tossed three times, the likelihood of obtaining three heads in a row is
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