FINRA Securities Industry Essentials Exam (SIE) SIE Question # 31 Topic 4 Discussion
SIE Exam Topic 4 Question 31 Discussion:
Question #: 31
Topic #: 4
An investor is bullish on a particular stock for the long run, but he would prefer a better price than the stock's current quote. Which of the following trades should the investor enter for this stock?
A limit order to buy allows the investor to specify the maximum price he is willing to pay for the stock. The order will only execute if the stock price falls to or below the specified price.
B is correctbecause a limit order to buy aligns with the investor’s desire to secure a better price.
Ais incorrect because a limit order to sell is used when an investor wants to sell at a minimum price.
CandDare incorrect because market orders execute at the current market price, not at a preferred price.
[Reference:SIE Study Guide, Chapter 1: Trade Execution and Order Types, ]
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