Question

A stock has the following quotes: Bid: $23.65 Ask: $23.80

A.) If you set a market order to buy, will your trade be executed? If so, at what price?

B.) If you had set a stop loss at $23.70, will your trade be executed? If so, at what price?

C.) If you set a limit order to buy at $23.85, will you trade be executed. If so, at what price?

D.) If you set a limit order to sell at $23.75, will you trade be executed. If so, at what price?

E.) If you set a stop limit order to buy, with a stop of $23.85 and a limit price of $23.90, will your trade be executed? If so, at what price?

F.) If you set a stop limit order to sell, with a stop price of $23.70, and a limit price of $23.60, will your trade be executed? If so, at what price?

Pleases show your work! Thanks!

Answer 1

A. Market order is executed at the prevailing price, Hence the trade will be executed at the ask price of $23.80

B. Stop loss order means that the stock should be sold if reaches below the specified price. Hence, the trade will be executed at $23.65

C. Limit order is executed only if the stock trades at above(in case of sell) or below (in case of buy) the set price. Yes, the trade will be executed at $23.80

D. No, the trade will not be executed since the stock is trading below the specified price

E.Stop Limit order means the trade be executed if the stock crosses the stop price and upto the limit price. The trade will not be executed since the stock is trading below the stop price

F.Yes, at the price of $23.65