If a trader developed a series of algorithms and bots to help her profit from predictable price trends, then which of the following algorithms would have resulted in the highest profit? (Note: Assume there were no transaction costs associated with the transactions and that purchase and sell orders occur immediately.) If the price of Humphry Incorporated's stock decreases by exactly $1 in 15 minutes, take the short position on 1,500 shares. Then, if the stock price decreases below $2, offset the short position. If the price of Humphry Incorporated's stock decreases by exactly $2 in 15 minutes, submit an order to purchase 3,000 shares. Then, if the stock price increases at all in any given 15-minute interval, submit an order to sell 3,000 shares. If the price of Humphry Incorporated's stock increases by exactly $1 in 15 minutes, submit an order to purchase 1,000 shares. Then, if the stock price increases above $8, submit an order to sell 1,000 shares. If the price of Humphry Incorporated's stock increases by exactly $1 in 15 minutes, submit the stock price increases above $7.25, submit an order to sell 6,000 shares. order to purchase 6,000 shares. Then, if
If a trader developed a series of algorithms and bots to help her profit from predictable price trends, then which of the following algorithms would have resulted in the highest profit? (Note: Assume there were no transaction costs associated with the transactions and that purchase and sell orders occur immediately.) If the price of Humphry Incorporated's stock decreases by exactly $1 in 15 minutes, take the short position on 1,500 shares. Then, if the stock price decreases below $2, offset the short position. If the price of Humphry Incorporated's stock decreases by exactly $2 in 15 minutes, submit an order to purchase 3,000 shares. Then, if the stock price increases at all in any given 15-minute interval, submit an order to sell 3,000 shares. If the price of Humphry Incorporated's stock increases by exactly $1 in 15 minutes, submit an order to purchase 1,000 shares. Then, if the stock price increases above $8, submit an order to sell 1,000 shares. If the price of Humphry Incorporated's stock increases by exactly $1 in 15 minutes, submit the stock price increases above $7.25, submit an order to sell 6,000 shares. order to purchase 6,000 shares. Then, if
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
8th Edition
ISBN:9781285065137
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter9: Stocks And Their Valuation
Section: Chapter Questions
Problem 1DQ
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Transcribed Image Text:If a trader developed a series of algorithms and bots to help her profit from predictable price trends, then which of the following algorithms would
have resulted in the highest profit? (Note: Assume there were no transaction costs associated with the transactions and that purchase and sell orders
occur immediately.)
If the price of Humphry Incorporated's stock decreases by exactly $1 in 15 minutes, take the short position on 1,500 shares. Then, if the
stock price decreases below $2, offset the short position.
If the price of Humphry Incorporated's stock decreases by exactly $2 in 15 minutes, submit an order to purchase 3,000 shares. Then, if
the stock price increases at all in any given 15-minute interval, submit an order to sell 3,000 shares.
If the price of Humphry Incorporated's stock increases by exactly $1 in 15 minutes, submit an order to purchase 1,000 shares. Then, if
the stock price increases above $8, submit an order to sell 1,000 shares.
If the price of Humphry Incorporated's stock increases by exactly $1 in 15 minutes, submit an order to purchase 6,000 shares. Then, if
the stock price increases above $7.25, submit an order to sell 6,000 shares.
Transcribed Image Text:Consider the following graph, which shows Humphry Incorporated's extremely volatile stock trend from 1 PM to 4 PM on a Tuesday. Each point on the
graph represents a 15-minute time interval and the price the stock was tracked to be at that interval.
10
3
2
1
Humphry Incorporated's Daily Stock Trend
гл
w
2
TIME (Hour in the day)
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