SIE practice questionmediumAccount Types: Limit and Stop Orders
A customer in a cash account is worried about a price drop. Which order type will GUARANTEE a sell order if the stock falls to a specific price?
- AStop order✓ Correct answer
- BLimit order
- CMarket order
- DFill-or-kill order
Explanation
Why A — Stop order
A stop order activates a market sell order once the stop price is hit. Limit orders only execute at a set price or better, with no guarantee. B, C, D don’t fit the scenario.
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