Securities Industry Essentials (SIE) ExamKnowledge of Capital MarketsEasy
A client places an order to sell 500 shares of XYZ stock at the best available price immediately. This order type is known as a:
- AMarket Order
- BStop Limit Order
- CStop Order
- DLimit Order
Show answer & explanationAnswer & explanation
Correct answer: A. Market Order
A market order is an order to buy or sell a security immediately at the best available current price. It prioritizes execution over price.
Why the other options are wrong
- B. A stop limit order combines features of a stop order and a limit order, specifying a stop price and a limit price.
- C. A stop order becomes a market order once a specified price is reached, used for protection or to initiate a position.
- D. A limit order specifies a maximum buy price or minimum sell price, not 'best available price immediately'.
Market Order
A market order is an order to buy or sell a security immediately at the best available current price.
- Guarantees execution.
- Does not guarantee a specific price.
- Prioritizes speed of execution.
Memory trick: Market Order: 'Make' it 'Move' 'Now'.