Series 7 Exam Question 120: Answer and Explanation

Question: 120

Which of the following types of orders becomes a market order as soon as a security passes a specified price?

• A. Stop
• B. Limit
• C. Market
• D. Stop-limit

Correct Answer: A

Explanation:

A. Stop orders become market orders for immediate execution once the underlying security touches or passes the price on the stop order. A stop-limit order becomes a limit order once the underlying security touches or passes the stop price.