Question : Case Study 78
GHI Ltd. is a conglomerate that has recently traded its shares on a stock exchange. The company's management is reviewing the process of placing an order.
Question :
When an investor places an order to buy shares at a specific price, what type of order is this?
Option 1: Market order
Option 2: Limit order
Option 3: Stop order
Option 4: Day order
Correct Answer: Limit order
Solution : The correct answer is (b) Limit order
When an investor places an order to buy shares at a specific price, it is called a "limit order." In a limit order, the investor specifies the maximum price they are willing to pay for a buy order or the minimum price they are willing to accept for a sell order. The order will only be executed if the market price reaches or matches the specified limit price. If the market price does not reach the limit price during the trading day, the order remains open until it is either executed or canceled by the investor.
What is the first step in the process of trading securities on a stock exchange?
Option 1: Settlement
Option 2: Execution of the order
Option 3: Dematerialization
Option 4: Placing an order
Regular exam updates, QnA, Predictors, College Applications & E-books now on your Mobile