Financial Industry Regulatory Authority (FINRA) Practice Exam

Question: 1 / 400

What would happen to a buy limit order placed at 42 when the market price is at 45?

The order would fill immediately

The order can only fill at 42 or lower

A buy limit order is designed to purchase a security at a specified price or lower. When an investor places a buy limit order at 42, it indicates that they only want to buy the asset at that price or less.

In this scenario, with the market price at 45, the buy limit order would not execute because the current market price is higher than the specified limit price of 42. Such orders remain unfilled until the market price reaches 42 or below. This mechanism helps investors control the price they are willing to pay, ensuring that they do not buy at a price that exceeds their set limit.

Therefore, the accurate description of what happens to that buy limit order is that it can only fill at 42 or lower.

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The order would fill between 42 and 45

The order would be canceled

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