SIE practice questioneasyOrder Types
Which of the following describes a sell stop order?
- AAn order to sell when the price drops to or below the stop price.✓ Correct answer
- BAn order to sell when the price rises above the stop price.
- CAn order to sell at a specific price or better.
- DAn order to sell only at the current market price.
Explanation
Why A — An order to sell when the price drops to or below the stop price.
A sell stop order is triggered when the security trades at or below the stop price. It then becomes a market order. Sell limit orders require a specific price or better, and market orders sell immediately at the best price.
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