SIE practice questionhardOrder Types
An investor enters a buy stop order at $40 on a stock currently trading at $35. What happens if the stock rises sharply to $45 in one trade?
- AThe order is triggered and filled at the next available price, which may be above $40✓ Correct answer
- BThe order is canceled
- CThe order executes at $40 exactly
- DThe order cannot be executed
Explanation
Why A — The order is triggered and filled at the next available price, which may be above $40
A buy stop becomes a market order; in a gap up, it fills at the next available price, potentially well above $40. It is not canceled or guaranteed to fill at the stop price.
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