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Basic Question 3 of 13
You have bought a stock at $30 per share. The current stock price is $28. If you want to sell the stock if the price falls below $25, you should place a ______.
B. limit sell order at $25
C. stop-buy order at $25
A. stop-loss order at $25
B. limit sell order at $25
C. stop-buy order at $25
User Contributed Comments 4
| User | Comment |
|---|---|
| Emily1119 | Why not limit order? |
| leftcoast | A limit sell order at $25 would be saying you want to sell at $25 or better. Seeing as the price is above $25, your order would be filled right away at the current price. Stop loss order won't become valid until the price reaches your stop price of $25. |
| irapp92 | I remember when I was studying for my series 7, I remembered orders by thinking: SLoBS over BLiSS. SL: sell limit, BS: Buy stop are executed above the market price. BL: buy limit, SS: sell limit are executed below the market price. (ignore the lowercase o and i, they just make more memorable words. Hope that helps anyone who may be struggling with basic orders |
| ascruggs92 | Thinking about it literally helps. A stop-loss order is placed to help prevent or "stop" losses of a certain magnitude from occuring |
I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
compare execution, validity, and clearing instructions
compare market orders with limit orders
CFA® 2024 Level I Curriculum, Volume 3, Module 1.