An investor is reviewing basic trading concepts before placing orders in a brokerage account. Which of the following statements correctly describe the fundamental execution rules of market orders and limit orders? (Select two correct statements.)
- A market order guarantees execution but does not guarantee a specific execution price.Cevap
- A buy limit order can only be executed at the specified limit price or a lower, more favorable price.Cevap
- CA market order guarantees that the final trade price will exactly match the bid or ask quote displayed at the moment the order was submitted.
- DA limit order automatically converts into an unrestricted market order as soon as any trade occurs in the market.
Cevap
The correct statements are that a market order guarantees execution speed without guaranteeing a specific price, and a buy limit order can execute only at the stated limit price or a lower price.
Market orders prioritize execution speed and guarantee fulfillment at the market's current prevailing price without guaranteeing an exact price. In contrast, buy limit orders protect the investor by stipulating that execution may occur only at the limit price or a lower, more favorable price.
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Basic Order Types and Execution Rules (Market vs. Limit Orders)