Which of the Following Is Incorrect with Respect to Limit

question 96

Multiple Choice

Which of the following is incorrect with respect to limit orders?

• A) They can be used only to buy stock.
• B) If the current quote does not meet the price cited in the limit order, the trade is not executed.
• C) The advantage of the limit order is that the investor makes the trade at the desired price.
• D) The disadvantage of the limit order is that the trade might not be executed at all.

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Definitions:

Margin of Safety

The difference between actual or projected sales and the break-even point, indicating the cushion a business has before it incurs a loss.

Variable Expenses

Expenditures that change in direct correlation with production levels or the quantity of sales, including costs like raw materials and direct labor.

Fixed Expenses

Costs that do not change regardless of the level of production or business activity.

Break-even Sales

The amount of revenue required to cover total fixed and variable costs, resulting in zero profit or loss.