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Difficulty: MediumTypes of Orders and Order Execution Strategies

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

  • Buy Stop OrderPlaced above the current market price; becomes a market order once the stop price is reached or crossed upward.
  • Sell Limit OrderPlaced above the current market price; executes only at the specified price or higher.
  • Immediate-or-Cancel (IOC)Must be executed immediately in whole or in part; any remaining unexecuted portion is canceled.
  • Fill-or-Kill (FOK)Must be executed immediately in its entirety; if the full quantity cannot be filled immediately, the entire order is canceled.

Answer

Buy Stop Order matches with 'Placed above the current market price; becomes a market order once the stop price is reached or crossed upward.' Sell Limit Order matches with 'Placed above the current market price; executes only at the specified price or higher.' Immediate-or-Cancel (IOC) matches with 'Must be executed immediately in whole or in part; any remaining unexecuted portion is canceled.' Fill-or-Kill (FOK) matches with 'Must be executed immediately in its entirety; if the full quantity cannot be filled immediately, the entire order is canceled.'
Each order type and time-in-force restriction matches its exact FINRA/SIE definitions: Buy Stop triggers a market buy above current price; Sell Limit guarantees execution at limit price or better above market price; IOC allows immediate partial fills while canceling the rest; FOK requires immediate total fill or complete cancellation.

Step-by-Step Solution

1
Identify order placement relative to market price and execution mechanism for stop vs limit orders.
Buy Stop orders are placed above market price and trigger market orders when hit; Sell Limit orders are placed above market price to guarantee a minimum price boundary.
Differentiates trigger-activated orders from price-restricted limit orders.
2
Evaluate time-in-force instructions regarding partial fills.
IOC permits immediate partial execution and cancels the remainder; FOK mandates full immediate execution or total cancellation.
Differentiates execution instructions that accept partial fills from those requiring all-or-none execution.

Key Concept

Order Types and Time-in-Force Execution Rules
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Topics

Types of Orders and Order Execution Strategies