Question : Case Study 79
JKL Corporation is a company that has recently executed trades on a stock exchange. The company's management is reviewing the trading procedure.
Question :
What is the trading procedure that matches buy and sell orders at the best available price?
Option 1: Market order
Option 2: Limit order
Option 3: Stop order
Option 4: Auction method
Correct Answer:
Market order
Solution : The correct answer is (a) Market order
The trading procedure that matches buy and sell orders at the best available price is a "market order." A market order is an order to buy or sell a security immediately at the best available current market price. The order is executed as quickly as possible, and the investor is guaranteed an execution, though the exact price may vary based on market conditions. Market orders are typically used when the investor prioritizes execution speed over the specific price at which the trade is executed.
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