SIE practice questioneasyOrder Types
A client places a stop order to sell shares at $50. What happens if the stock trades at $50?
- AThe stop order executes only at $50.
- BThe stop order becomes a market order and will sell at the next available price.✓ Correct answer
- CThe stop order is canceled.
- DThe stop order becomes a limit order.
Explanation
Why B — The stop order becomes a market order and will sell at the next available price.
When a stop price is reached, the stop order becomes a market order and can sell at the next available price, which may not be exactly $50. It does not execute only at $50, nor does it become a limit order or get canceled.
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