Suppose you bought 100 shares of IBM at $200 per share. What is the maximum loss if you place a stop-loss order at $165

Business

1 answer:

Lynna [10]3 years ago

4 0

Answer:

$3,500

Explanation:

Placing a stop-loss order at $165 means that the last amount that the stock traded, it had a price of $165 per share.

Based on that, it is evident that each stock has lost $35 when compared to the price at which the stop-loss order was placed and the initial cost per share of $200.

Loss per share=$200-$165=$35

The loss incurred on 100 shares of IBM=loss per share*number of shares owned

The loss incurred on 100 shares of IBM=$35*100

The loss incurred on 100 shares of IBM=$3,500

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Valentin [98]

Solution :

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3 years ago

According to the CAPM, what is the market risk premium given an expected return on a security of 13.6%, a stock of 12, and a ris

Neporo4naja [7]

The question is incomplete. Here is the complete question

According to the CAPM, what is the market risk premium given an expected return on a security of 13.6%, a stock beta of 1.2, and a risk-free interest rate of 4%?

Answer:

Explanation:

The expected return on security is 13.6%

The stock beta is 1.2

The risk free interest rate is 1.4

Therefore, using the CAMP , the market risk premium can be calculated as follows

13.6%= 4% + 1.2×MRP

13.6%-4%= 1.2MRP

9.6%=1.2MRP

MRP= 9.6/1.2

MRP= 8%

Hence the market risk premium is 8%