Securities Industry Essentials (SIE) ExamUnderstanding Trading, Customer Accounts, and Prohibited ActivitiesEasy
A client instructs their registered representative to sell 300 shares of ABC stock at the best available price immediately. What type of order is this?
- ALimit order
- BStop order
- CMarket order
- DStop-limit order
Show answer & explanationAnswer & explanation
Correct answer: C. Market order
A market order is an instruction to buy or sell a security immediately at the best available current price. It guarantees execution but not a specific price.
Why the other options are wrong
- A. A limit order specifies a maximum purchase price or a minimum selling price.
- B. A stop order becomes a market order once a specified trigger price is reached.
- D. A stop-limit order becomes a limit order once a specified trigger price is reached.
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.
- Typically used when immediate execution is paramount.
Memory trick: My Market Order means 'Go now, get the best price!'