Series 7 practice questionmediumOrder Types — FOK and AON
A customer places a Fill-or-Kill (FOK) order to buy 1,000 shares of JKL at $25. If only 700 shares are available at $25, what happens?
- A700 shares are purchased and the remaining 300 shares are cancelled
- BThe order is held until all 1,000 shares become available
- C700 shares are purchased and 300 shares are placed as a GTC order
- DThe entire order is cancelled immediately✓ Correct answer
Explanation
Why D — The entire order is cancelled immediately
A Fill-or-Kill (FOK) order requires that the entire order be filled immediately and completely, or the entire order is cancelled. Unlike an All-or-None (AON) order, which also requires complete execution but allows time for the full quantity to become available, a FOK order demands immediate full execution. Since only 700 of the 1,000 shares are available, the entire FOK order is cancelled.
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