SIE practice questioneasyOrder Types
A buy stop order is typically used to:
- ALimit a loss on a short position✓ Correct answer
- BBuy below the current price
- CSell above the current price
- DLimit a loss on a long position
Explanation
Why A — Limit a loss on a short position
A buy stop order is used to protect against losses on a short position by buying back if prices rise. The other options describe different order types or incorrect uses.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Related Trading & Settlement questions
- When would a sell stop-limit order be activated?
- Which of the following order types guarantees execution but not price?
- Which type of order would an investor use to buy a security ONLY if it falls to a specific price or lower?
- According to Regulation T, what is the initial margin requirement for most stocks?