Question

McDonald's stock is now selling for $92 per share. Kim wants to buy 100 shares but only if she can do so at $90 or less. She should place a(n) A) stop order. B) market order. C) limit order. D) odd-lot order.

Answer 1

Answer:

C) Limit Order  

Explanation:

A limit order is used to buy or sell a stock at a specified price within a price range.

Under a buy limit order, the investor would place the highest price limit at which he/she is willing to buy. So such a order can be executed at a specified price and below. So when the price of the security touches the specified price of the limit order, the action (buy) will be immediately exercised and the order will be completed.

Similarly, under sell order, the order can be executed by placing the lowest sell price as limit and anything above.

A limit order specifies and fixes the price range.

In the given case, Kim wants to buy stock of McDonalds at a price of $90 or anything below.

This is a case of a buy limit order.