Question

You short-sell 400 shares of Rock Creek Fly Fishing Co., now selling for $45 per share. If you want to limit your loss to $2,500, you should place a stop-buy order at ___Multiple Choice

A. $51.25
B. $77.50
C. $38.75
D. $45.00

Answer 1

To limit your loss to $2,500 when short-selling 400 shares of Rock Creek Fly Fishing Co., you should place a stop-buy order at $42.50 per share, which is not listed among the choices.

Step-by-step explanation:

To limit your loss to $2,500, you need to calculate the stop-buy order price by subtracting the desired loss from the initial selling price. In this case, the initial selling price is $45 per share and the desired loss is $2,500. Therefore, the stop-buy order price would be $42.50 per share. The correct option from the given choices is not listed in the multiple-choice options.