Examkin

Question

Difficulty: HardTypes of Orders and Order Execution Strategies

Match each specific order type or execution instruction with its correct operational behavior under exchange trading rules.

  • Sell Stop-Limit OrderTriggered when market price falls to or through the stop price, then can only be executed at or above the specified limit price.
  • All-or-None (AON) OrderRequires complete fill of the total quantity specified, but does not mandate immediate execution and may remain active.
  • Market-on-Open (MOO) OrderMust be executed during the opening auction of trading; any unfilled portion is canceled immediately.
  • Good-til-Canceled (GTC) with Do Not Reduce (DNR)Remains in force until filled or canceled, and instructs the broker-dealer not to lower the limit price on ex-dividend dates.

Answer

Sell Stop-Limit Order matches activation on price drop followed by execution at or above the limit price; All-or-None Order matches full quantity requirement without immediate cancellation; Market-on-Open Order matches execution in the opening auction or immediate cancellation; GTC with DNR matches open order persistence without price reduction on ex-dividend dates.
Each order type serves a distinct function: Sell Stop-Limit activates on a downward price movement to enforce a minimum sale price; All-or-None mandates full share quantity without requiring immediate execution; Market-on-Open targets opening bell execution; and GTC with DNR stays active across trading days without dividend price adjustments.

Step-by-Step Solution

1
Analyze Sell Stop-Limit mechanics.
The order activates when the market price drops to or below the stop price, converting into a limit order to sell at or above the limit price.
Stop prices act as triggers on falling prices for sell stops, while limit prices establish minimum acceptable execution values.
2
Distinguish All-or-None (AON) from Fill-or-Kill (FOK).
AON requires total quantity execution but permits time to achieve the fill.
AON lacks the immediate timing restriction present in FOK and IOC orders.
3
Evaluate Market-on-Open (MOO) timing constraints.
MOO orders target the opening price auction.
If the order cannot participate in the official market opening, it is immediately canceled.
4
Examine the Do Not Reduce (DNR) qualifier on GTC orders.
DNR prevents automatic adjustment of the order price for cash dividends.
Standard FINRA/exchange rules automatically reduce open limit buy and sell stop orders on the ex-date by the dividend amount unless DNR is explicitly attached.

Key Concept

Order Execution Qualifiers and Trigger Mechanics
Rate this question

Topics

Types of Orders and Order Execution Strategies