CFA Practice Question
A stop-limit order is different from a simple stop order in that once the stock price reaches the preset stop price the order is converted into a ______.
B. market order
C. start order
A. limit order
B. market order
C. start order
Correct Answer: A
User Contributed Comments 13
| User | Comment |
|---|---|
| Khadria | "B" is correct: http://www.sec.gov/answers/stopord.htm |
| Tomcat82 | khadria, based on that link "A" is correct: "A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order. Once the stop price is reached, the stop-limit order becomes a limit order to buy or to sell at a specified price." |
| whipp | B is the correct answer if the question asked how a simple stop order is different from a stop-limit order |
| magicchip | A is correct. |
| Bududeen | i think b is correct. when the price reaches the preset price, the instrument has to be sold or bought immediately at the existing price. |
| Renaud1807 | whipp is right, single stop: market order stop limit order: limit order |
| Vikku | The question asks, how a STOP-LIMIT order is different, for which answer A makes sense. It is not asking what happens to a simple stop order when the stock price reaches the preset stop price. |
| dipu617 | I think Vikku has a point. But its still confusing. Could be A or B. I chose B but now confused... |
| 2014 | I choose B But prefer A .... |
| jonan203 | wow, you guys need to work on your reading comprehension, the question is clearly asking how a stop-limit is different from a stop, not the other way around. |
| gill15 | I chose B too |
| gill15 | Regardless...if theres a 160 questions like this one im failing |
| Inaganti6 | The CFA is almost like math. If the question asks for 2 + 2 and the answer is 4, then it's 4. I like how people actually sit here and opine about what 2 + 2 COULD BE or SHOULD BE. It's hilarious. |