Rate of returns using limit orders for stock transactions
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The stock of Michelle Travel company is selling for 43.00 a share. You put in a limit buy order at 44.00 for one month. During the month, the stock price declines to a low of 38.00, jumps to a high of 53.35, and has a final stock price of 43.00. Ignore commissions.
What is the rate of return on this investment, the rate of return if you had put in a market order rather than the limit order, and what if the limit order was 39.00 rather that 44.00 per share?
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The solution discusses the various options and the results of the transactions.
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With the limit order at 44, you would have bought at that price because the stock jumped up. Final price of the stock is 43 for a loss of $1/share or ...
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