Question

Which of the following orders asks the broker to buy at or below a specified price...

Which of the following orders asks the broker to buy at or below a specified price (not above this price)?

Group of answer choices

Market order

Stop-buy order

Stop-sell order

Limit-buy order

Limit-sell order

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Homework Answers

Answer #1

The correct answer is Limit-buy order

When we decide to buy a stock at a fixed price or below the price fixed by us then a limit buy order has to be placed with the broker.

By using a Limit buy order the trader / investor will get the stock only if the price of stock touches the specified price or falls below it. This ensures that the trader / investor does not pay more than what he wants to pay for the stock.

It may happen that the buy order does not get executed if the stock price does not hits his target price or falls below it.

Example - Suppose stock A is currently trading at $3.50. We feel that $3.20 will be the best price to acquire it. Thus we will place a limit buy order of $3.20. If during market hours the stock price touches or falls below $3.20 then our order will be executed otherwise it will remain not filled.

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