A Stop-Limit Order Is an Order to Buy or Sell

question 38

Multiple Choice

A stop-limit order is an order to buy or sell a stock that combines the features of a stop order and a limit order.Once the stop price is touched in the market,the stop-limit order becomes a limit order to buy or to sell at the limit price.Which of the following are true?

• A)The benefit of a stop-limit order is that the investor can control the price at which the trade will get executed.
• B)A stop-limit order may never get filled if the stock's price never reaches the specified limit price.This may happen especially in fast-moving markets where prices fluctuate wildly.
• C)The use of stop limit orders is much more frequent for stocks that trade on an exchange than in the over-the-counter (OTC) market.
• D)In addition, your broker-dealer may not allow you to place a stop limit order on some securities or accept a stop limit order for OTC stocks.
• E)All of the above are true

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Definitions:

Income Tax Expense

The total amount of income tax a company is obligated to pay to tax authorities, reported in its financial statements.

Retained Earnings Account

A component of shareholders' equity that represents the accumulated portion of net income that a company has not distributed to shareholders as dividends.

Cumulative Earnings

The total amount of profit a company has earned over a specific period, often used to assess profitability trends.

Inception

The beginning point or establishment of an activity, agreement, or document.