An investor sold a stock short a year ago for $50 per share. The stock's price is currently $52 per share. If the investor is unwilling to accept a loss on the short sale of more than $5 per share on the transaction, she could place a
A)stop-loss order with a specified selling price of $55 per share.
B)stop-buy order with a specified purchase price of $55 per share.
C)stop-loss order with a specified selling price of $45 per share.
D)stop-buy order with a specified purchase price of $45 per share.

Question

Quizplus · Accepted Answer

A stop-buy order with a specified purchase price of $55 per share would limit the investor's loss to $5 per share, as it would trigger a buy to cover the short position if the stock price rises to $55.

An Investor Sold a Stock Short a Year Ago for $50