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Question

Difficulty: MediumTypes of Orders and Order Execution Strategies

Match each equity order type or execution qualifier on the left with its corresponding execution rule or trigger condition on the right.

  • Buy Limit OrderExecutes at the specified price or lower, typically entered below the current market price.
  • Sell Stop OrderTriggers a market order to sell when the security trades at or below the specified price, commonly used to limit losses on a long position.
  • All-or-None (AON) QualifierRequires the entire order quantity to be filled in full, but permits multiple execution attempts over time without requiring immediate fill.
  • Immediate-or-Cancel (IOC) QualifierRequires immediate execution of whatever portion of the order is available at the market, while canceling any remaining unfilled portion.

Answer

Buy Limit Order matches with execution at the specified price or lower; Sell Stop Order matches with triggering a market order to sell when trading at or below the specified price; All-or-None matches with requiring full quantity execution without requiring immediate fill; Immediate-or-Cancel matches with requiring immediate execution of available shares while canceling any remaining portion.
Each order type and qualifier matches its exact SEC and FINRA regulatory trading definition: Buy limit orders cap execution price at or below the limit; sell stop orders trigger a market order when market price falls to or below the stop price; AON requires complete quantity execution without requiring immediate fill; IOC accepts immediate partial execution and cancels the remainder.

Step-by-Step Solution

1
Analyze limit order execution constraints
Buy limit orders guarantee price control by executing at or below the limit price, placed below current market price.
Investors use buy limit orders to prevent paying more than a intended maximum entry price.
2
Evaluate stop order activation mechanics
Sell stop orders become active market sell orders once the market price drops to or past the stop price.
This order type acts as a downside protective mechanism for existing long positions.
3
Distinguish between execution time and fill-size qualifiers
AON restricts execution size to 100% of the order without time urgency, whereas IOC demands immediate partial or full fill with cancellation of any leftover balance.
AON prevents partial fills over time, whereas IOC prioritizes immediate execution for whatever liquidity exists.

Key Concept

Order Types and Execution Qualifiers
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Topics

Types of Orders and Order Execution Strategies