SIE practice questionmediumSell Limit Orders
An investor places a sell limit order at $65 for a stock currently trading at $60. Under what condition will this order execute?
- AIf the stock drops to $55
- BImmediately at $60
- CAt the end of the trading day regardless of price
- DIf the stock rises to $65 or higher✓ Correct answer
Explanation
Why D — If the stock rises to $65 or higher
A sell limit order sets the minimum price the seller is willing to accept. It will only execute at $65 or above. Since the current price ($60) is below the limit ($65), the order will sit unexecuted until the stock rises to at least $65. Sell limit orders are placed above the current market price, while buy limit orders are placed below it.
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