SIE practice questionhardOrder Types - Stop-Limit Risks
What is a potential risk of using a stop-limit order to sell?
- AThe order may not be executed if the limit price is not met✓ Correct answer
- BThe order will always execute at the market price
- CThe order is executed immediately at the limit price
- DIt guarantees execution
Explanation
Why A — The order may not be executed if the limit price is not met
A stop-limit order triggers a limit sell, but if the price moves past the limit, it may never execute. It does not guarantee execution (D), nor will it always execute at the market or immediately (B, C).
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