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Zorluk: KolayTypes of Orders and Order Execution Strategies

An investor is reviewing basic order types and execution rules for stock transactions. Which of the following statements regarding stop orders and limit orders are CORRECT? (Select ALL that apply.)

  1. A stop order becomes an active market order once the stock trades at or through the specified stop price.Cevap
  2. A limit order sets the maximum price an investor is willing to pay when buying, or the minimum price when selling.Cevap
  3. C
    A stop order guarantees that the customer's trade will be executed at the exact stop price stated in the order.
  4. D
    A limit order must be executed by a broker-dealer acting as a principal dealer trading directly out of its own inventory.

Cevap

The correct statements are that a stop order becomes a market order once activated by reaching the stop price, and a limit order specifies a maximum purchase price or minimum sale price.
The correct options accurately identify that a stop order converts to a market order upon reaching the stop trigger price, and that a limit order sets a strict maximum price for purchases or minimum price for sales.

Adım Adım Çözüm

1
Analyze the mechanics of a stop order.
A stop order is inactive until the market reaches the stop price. When triggered, it converts into a market order, which does not guarantee a specific execution price.
Understanding how activation turns a stop order into a market order is essential to evaluating stop order guarantees.
2
Analyze the mechanics of a limit order.
A limit order places a boundary on price: buy limit orders state the maximum acceptable price, while sell limit orders state the minimum acceptable price.
Price control is the core defining feature of limit orders.
3
Evaluate broker-dealer capacity rules.
Orders of any standard type can be filled whether the firm acts as an agent (broker) or principal (dealer).
Order execution type (limit/market/stop) is independent of whether the executing firm acts as broker or dealer.

Anahtar Kavram

Stop Order Activation vs. Limit Order Price Control
Tahmini Süre:1m 0s
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Konular

Types of Orders and Order Execution Strategies