CFA Practice Question

There are 275 practice questions for this study session.

CFA Practice Question

You have bought a stock at $30 per share. The current stock price is $28. If you want to sell the stock if the price falls below $25, you should place a ______.

A. stop-loss order at $25
B. limit sell order at $25
C. stop-buy order at $25
Correct Answer: A

If the price drops to $25, the stock must be sold at the prevailing market price.

User Contributed Comments 4

User Comment
Emily1119 Why not limit order?
leftcoast A limit sell order at $25 would be saying you want to sell at $25 or better. Seeing as the price is above $25, your order would be filled right away at the current price.

Stop loss order won't become valid until the price reaches your stop price of $25.
irapp92 I remember when I was studying for my series 7, I remembered orders by thinking: SLoBS over BLiSS.

SL: sell limit, BS: Buy stop are executed above the market price.
BL: buy limit, SS: sell limit are executed below the market price.
(ignore the lowercase o and i, they just make more memorable words.

Hope that helps anyone who may be struggling with basic orders
ascruggs92 Thinking about it literally helps. A stop-loss order is placed to help prevent or "stop" losses of a certain magnitude from occuring
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