Question

Here is some price information on Marriott: Bid Asked Marriott 20.05 20.10 You have placed a stop-loss order to sell at $20. What are you telling your broker? Given market prices, will your order be executed? Explain.

Answer 1

Bid 20.05 Ask 20.10

You can sell at the market price of 20.05

You have placed a stop-loss order to sell at $20. Ideally, you would like to sell your shares at higher prices. But, to limit losses, you place a stop-loss sell order. If the stock price goes below 20 you do not want to take additional losses, so you tell your broker to sell your shares at 20. This way you have limited your losses.

Since the current market price is 20.05, your stop loss sell order is not executed.

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