SIE practice questionmediumOrder Types
A buy limit order is placed at $20 for XYZ stock, currently trading at $22. What will happen?
- AThe order will fill if XYZ rises above $22.
- BThe order fills immediately at $22.
- CThe order will only fill if XYZ drops to $20 or lower.✓ Correct answer
- DThe order is canceled immediately.
Explanation
Why C — The order will only fill if XYZ drops to $20 or lower.
A buy limit only executes at the limit price or lower. Buying at $22 is above the limit. The other options misunderstand limit order mechanics.
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