Question

A customers calls her broker to discuss her account. The broker recommends that the customer buy 500 shares of DEF stock. The customer tells the broker to do it, and the broker enters the order and gets a trade execution report back less than a minute later. The broker informs the customer that the trade was executed and tells her the price of the trade. This is an example of a:__________.A. Market orderB. Market - Not Held orderC. Limit orderD. Stop order

Answer 1

Answer:

A. Market Order

Explanation:

In a market order, the securities are bought and sold immediately at the current market price prevailing at that time of the day.

Under this, order size is entered such as quantity of stock, the action to be taken i.e buy or sell and no buying/selling rate is mentioned, rather "market" option is checked.

Such market price keeps fluctuating every every moment so the order would be completed at that price which prevailed at that exact moment.

In the given case, the broker upon instructions of the client immediately got the order executed of 500 shares in less than a minute. This is the case of market order wherein the order was executed at current market price.