CFA Practice Question
A ______ order guarantees that you will not receive less than a specified minimum price for a stock.
B. stop
C. market
D. limit sell
E. day
A. limit buy
B. stop
C. market
D. limit sell
E. day
Correct Answer: D
User Contributed Comments 7
| User | Comment |
|---|---|
| gord | correct...but the word guarantee makes it a troubling answer. Ex. If you place a limit sell order at $10 for a stock at $15 and overnight, terrible news hits and the stock opens at $5, your trade will execute immediately at the prevailing market price. |
| Chitu | Stop loss order could also seem fit for the question! |
| tagr | Gord's example describes the case what will happen with a stop loss order in case of an enormous downward price gap. However, in case you put in a limit sell order for $10 with a stock trading at $15 your order will execute immediately and under normal market conditions you will receive around $15. A limit sell order makes only sense if the price at which you want to sell, is above the current market price. |
| Bududeen | tagr is correct gord!!! where are u going? |
| bundy | What shold happen is you put a stop loss order with a limit price |
| michlam14 | limit orders are not executed unless it can be sold at your required price, hence it is guranteed you will get your required selling pr at least, or more money than what you asked for. |
| jonan203 | it guarantees price NOT execution! |