Securities Industry Essentials (SIE) ExamUnderstanding Trading, Customer Accounts, and Prohibited ActivitiesEasy
A registered representative receives an order from a client to sell 300 shares of XYZ stock 'at the market' immediately. This type of order guarantees:
- AExecution at the best available price.
- BA specific execution price.
- CExecution only within a certain price range.
- DExecution at the opening price of the next trading day.
Show answer & explanationAnswer & explanation
Correct answer: A. Execution at the best available price.
A market order guarantees immediate execution at the best available price, but does not guarantee a specific price. It will be filled as quickly as possible.
Why the other options are wrong
- B. Market orders do not guarantee a specific price; they guarantee execution.
- C. This describes a limit order, not a market order.
- D. This might happen if placed 'at the open,' but a standard market order is immediate.
Market Order
An order to buy or sell a security immediately at the best available current price.
- Guarantees execution.
- Does NOT guarantee a specific price.
- Filled as quickly as possible.
Memory trick: Market orders: 'Just get it done!'