SIE Exam Question 202: Answer and Explanation

Question: 202

Which of the following is an example of a stop order?

• A. An order to sell 100 shares of XYZ at the best price available
• B. An order to sell 100 shares of XYZ (currently trading at $50) if the price drops to $45
• C. An order to buy 100 shares of XYZ at the best price available
• D. An order to buy 100 shares of XYZ at $40 or less

Correct Answer: B

Explanation:

An order to sell at a specific price which is below the current market price is called a stop order. Answers A and C are examples of a market order. Answer D is an example of a limit order.