SIE practice questionmediumOrder Types
A customer places a buy limit order for 100 shares at $20. The stock trades at $20.05 and $19.95. What happens to the order?
- AThe order is canceled if not executed at $20.
- BThe order is executed at $20.05.
- CThe order is partially filled at $20.05 and $19.95.
- DThe order is executed at $19.95.✓ Correct answer
Explanation
Why D — The order is executed at $19.95.
A buy limit order is filled at the limit price or lower. Since $19.95 is lower than $20, the buy limit order can be filled at that price. $20.05 is above the limit, so the order won’t execute at that price.
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