Question

Mr. Berg has been charting DMF stock prices. The stock usually fluctuates between 71 and 86. The stock is currently at 84, and the increasing upside volume makes him believe that a breakout is possible. Which of the following would he most likely enter?

1) A buy stop at 88.
2) A sell stop at 70.
3) A buy limit at 85.
4) A sell limit at 88.

Answer 1

Given the potential for a breakout with the stock price of DMF at $84, Mr. Berg would most likely enter a buy stop order at $88 to capture the upside.

Step-by-step explanation:

The situation described in the student's question involves Mr. Berg who is tracking DMF stock prices, which typically fluctuate between $71 and $86.

Currently, the stock is priced at $84 and showing signs of an uptick in volume, suggesting a potential breakout. Given the situation, Mr. Berg would most likely place a buy stop order, which is an order to buy a stock at a specified price higher than the current market price.

This type of order is often used to capture potential upside if a stock's price continues to rise, therefore, the most likely order he would enter is option 1) A buy stop at $88.

In this scenario, Mr. Berg is monitoring the DMF stock prices. The stock typically fluctuates between $71 and $86. Currently, the stock is at $84, and there is increasing upside volume, indicating a possible breakout. Given this information, Mr. Berg would most likely enter a buy stop at $88.