Answered: Differentiate among market orders,…

Differentiate among market orders, limit orders, and stop-loss orders. What is the rationale for using a stop-loss order rather than a limit order?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter1: An Overview Of Financial Management And The Financial Environment

Section: Chapter Questions

Problem 14MC

See similar textbooks

Related questions

Q: For technical analysis, based on patterns of historical prices, to have value, ______ form of market…

A: Weak form efficiency market hypothesis is an element of efficient market hypothesis which states…

Q: Examples of a market order, limit order and a stop loss?

A: To buy or sell Common stock or shares of a firm, you can place different types of buy/sell orders…

Q: explain how sunk costs create a barrier to entry into the market place.

A: Sunk costs are expenses that can not be retrieved if a corporation wishes to leave a market.

Q: Describe a situation when a. Investor would want to use a limit order.

A: The limit order's primary objective is to set a specific price of a security in order to buy or sell…

Q: What is lower of cost/market, and why is it used? Provide an example.

A: Inventory is a term which depicts the amount of finished goods prevailing in the business. The…

Q: In a make versus buy decision which of the following factors is not relevant? fixed production…

A: Make or buy decision: Every company wants to maximize its net income. The best method to increase…

Q: Explain the argument for and against the use of net price method with respect to purchase discounts?

A: The Net Price Method (NPM) provides information about the purchase discounts lost by the company and…

Q: Define predatory pricing, dumping, and collusive pricing.

A: Target Costing:Target costing refers to the cost that is ascertained as per the needs and wants of…

Q: The decision to accept or reject a special order and the selection of a price for a special order…

Q: What is a market order? What is a limit ordrer? how are each executed?

A: Market order is a type of instructions in the stock market to purchase or sell the securities…

Q: Define the law of one price carefully, noting its fundamentals assumptions. Why are these…

A: The question is based on the concept of One price theory used in purchase power parity.

Q: *An order placed to protect a short position is called a stop loss sell. O protective call.O stop…

A: Call option - It is a contingent claim derivative that derives its value from the underlying which…

Q: How does Just-In-Time (JIT) system help minimize the inventory investment? Explain.

A: Just-In-Time (JIT) is used for that inventory which is owned by business at reduced amount on…

Q: When should special pricing orders be accepted?

A: Special pricing order: A special order is a unique one time order made by a customer. In this order…

Q: Describe the downward demand spiral and its implications for pricing decisions.

A: Downward Demand Spiral: A downward demand spiral is a continuing reduction in the demand for a…

Q: Distinguish between market-skimming pricing and market-penetration pricing.

A: Product pricing strategies: There are two product pricing strategies of a company. They are,…

Q: Explain the most important considerations when deciding whether or not to accept a special order at…

A: Profit maximisation is the main aim of any business. So…

Q: What is customer value? Choose the correct. A. Ratio between the customer's perceived benefits…

A: A customer is an entity that buys goods or services from third parties. Accumulating a profitable…

Q: What questions should managers answer when considering special pricing orders?

A: Definition: Special Pricing: When businesses get Special orders from its customers for bulk…

Q: What are the differences among a stop-loss order, a limit sell order, and a market order?

A: A stop-loss order: A stop-loss order is a tool used by traders and investors to limit losses and…

Q: A market order has:a. Price uncertainty but not execution uncertainty.b. Both price uncertainty and…

A: A market order is an order to buy or sell a stock at the best available price, to be executed…

Q: Describe and apply the lower-of-cost-or-market rule.

A: Cost: It is the economic value incurred by an organization to produce a product or render a…

Q: What are the advantages and disadvantages of target pricing versus cost-based pricing?

A: Advantages of target pricing are as follows: It help in controlling in cost It provide profit with…

Q: How can a company track the extent of price discounting on a customer-by-customer basis?

A: Customer Profitability Analysis:Customer profitability analysis is the process of ascertaining the…

Q: Distinguish between the downward demand spiral and the ramifications of this for price choices

A: This question tells about the downward demand spiral and the ramifications of this for price…

Q: Explain sales cutoff tests.

A: Auditing: Auditing refers to an independent examination of financial information of any…

Q: Understand and apply the lower-of-cost-or-market rule.

A: Cost: It is the economic value incurred by an organization to produce a product or render a service.

Q: Is short selling possible, using a CFD

A: Contract for difference is a financial derivative which is an agreement to exchange the difference…

Q: Discuss the differences between a market order, limit order, and stop order.

A: Solution: Stock market is the place where securities are traded in market. There are different types…

Q: When allocating the transaction price to performance obligations when a stand-alone selling price is…

A: Introduction:

Q: Efficient customer service could be achieved through avoiding stock outs by making accurate A.…

A: Stock Out: The simple meaning is: When there is a demand in market for the product but the company…

Q: Conceptually, how would you evaluate a quantity discount offerfrom a supplier?

Q: What’s the difference between order and volume discounts? Justify your answer.

A: Manufacturers and sellers utilize volume discount pricing, or volume discounting, to reward…

Q: In the economic order quantity (EOQ) model, where does the optimal order quantity value exist? O…

A: Economic order quantity is the quantity that is best for the business. It shows the quantity where…

Q: The differential analysis approach to pricing for special orders could lead to under-pricing in the…

A: Differential analysis approach helps in analyzing the future investment opportunities and it…

Q: What is the difference between order discounts and volume discounts?

A: there are different types of discount from the cells that customer can earn close discount are…

Q: Which decision will involve no incremental revenues?

A: Answer: Make or buy decision.

Question

Differentiate among market orders, limit orders, and stop-loss orders. What is the rationale for using a stop-loss order rather than a limit order?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Introduction

VIEW

Step 2

VIEW

The rationale for using a stop-loss order rather than a limit order is as follow:

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

What are the differences among a stop-loss order, a limit sell order, and a market order?
Discuss the differences between a market order, limit order, and stop order.
What are the differences between market ordersand limit orders?
What is the difference between order discounts and volume discounts?
What’s the difference between order and volume discounts? Justify your answer.
A market order has:a. Price uncertainty but not execution uncertainty.b. Both price uncertainty and execution uncertainty.c. Execution uncertainty but not price uncertainty.
Explain the following assertion: “Price setting generally requires a balance between market forces and cost considerations.”
A friend has asked you to explain the difference between a market order and a limit order. demonstrates your understanding of the differences between these two orders.
Define price elasticity of demand. Give an example of a product with relatively elastic demand and an example of a product with relatively inelastic demand. (Give examples not given in the text.)
Describe how changes in the demand, ordering cost,or holding cost affect the EOQ.
What is the discounting process?
what mean Blind Purchase Order (Blind PO)? and profite