Question

You short-sell 200 shares of Rock Creek Fly Fishing Co. today at $50 per share. If you want to limit your loss to $2,500, $ Blank 1. Fill in the blank, read surrounding text. is the maximum price per share you should place when you close your position

Answer 1

Answer:

So, the maximum price per share that should place is $62.5

Explanation:

As per given data

Current Price of stock = $50

Numbers of share = 200 shares

Limit of loss = $2,500

We will use the following formula to calculate the Maximum price of stock

Total Maximum loss possible = [ ( Prefix Price of share - Current price of share ) x Numbers of shares of stock ]

$2,500 = [ ( Prefix Price of share - $50 ) x 200 ]

$2500 / 200 = Prefix Price of share - $50

$12.5  + $50 = Prefix Price of share

$62.5 = Prefix Price of share

Therefore, thee order will be stopped at $62.50