Question

Selma wants to pay no more than $50 for a share of stock. The bid ask...

Selma wants to pay no more than $50 for a share of stock. The bid ask spread is $49 - $51. Selma should _________.

A place a market order at the dealer’s bid price

B place a limit buy order with limit price = $51

C place a limit buy order with limit price = $50

D place a market buy order

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Homework Answers

Answer #1

If she wants to purchase the stock at $50 then she should be putting the limit order buy at $50 because limit order buy will only execute the buy order if the price is reaching the limit order , else the order will not be executed, so since she wants to pay no more than $50 she should be trying to place a limit buy order with a limit price of $50.

All the other options regarding Market buy order are false.

Correct answer will be option ( C) place a limit buy order with limit price = $ 50.

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