SIE practice questionmediumOrder Types
A customer places a stop-limit order to sell 100 shares of DEF at $40 with a stop price of $42. If DEF falls from $44 to $41 and then directly to $39, what is the likely outcome?
- AThe order is triggered and executed at $40
- BThe order is triggered but may not execute if no trades occur at $40 or above✓ Correct answer
- CThe order remains inactive since the stop price was not reached
- DThe order is executed immediately at the market price once triggered
Explanation
Why B — The order is triggered but may not execute if no trades occur at $40 or above
A stop-limit sell order triggers when the stock hits $42, but only executes at the limit ($40) or better. If the price drops straight from $41 to $39, there may be no trades at $40, so it may not execute.
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