SIE practice questionmediumOrder Types
A customer enters a stop-limit order to sell 200 shares with a stop price of $42 and a limit of $41. The stock falls to $42, then immediately drops to $40. What is most likely to occur?
- AThe shares are sold at $40.
- BThe order is triggered but may not execute if no one is willing to buy at $41 or higher.✓ Correct answer
- CThe order remains inactive since the stop price wasn't reached.
- DThe order becomes a market order at $40.
Explanation
Why B — The order is triggered but may not execute if no one is willing to buy at $41 or higher.
The stop-limit order triggers at $42 (stop price), but will only execute at the $41 limit or better. If the market drops quickly to $40, the price is too low for the limit, and the order may not be filled.
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