Question

a stock - broker uses a computer program to design trades for clients. designing a trade with tradersys

1. choose strategy
2. choose expiration date
3. enter dollar amount
4. select

un\
which strategy allows a client to sell shares before an expected market price fall?
a. 1
b. 2
c. 3
d. 4
strategies
strategy 1: long position buying shares with the expectation that the market price will rise
strategy 2: short position selling shares with the expectation that the market price will fall
strategy 3: limit order setting a maximum market price to buy, or a minimum market price to sell, shares
strategy 4: stop - loss order setting a specific market price to buy or sell shares
strategy 5: covered call buying shares at a contract price
selecting
un\ results in a listing of all available opportunities. when prompted, select
ext\ to complete your trade.

Explanation:

Strategy 2, Short Position, involves selling shares with the expectation that the market price will fall. So it allows a client to sell shares before an expected market - price fall. Strategy 1 is for buying expecting price rise, Strategy 3 is about setting price limits for buy/sell, and Strategy 4 is for setting a specific price to buy or sell but not specifically for selling before a price fall.

Answer:

B. 2