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Recognizing Different Types of Orders As an investor, based on your goals and investment objectives you create an investment plan. You choose your stockbroker that
Recognizing Different Types of Orders
As an investor, based on your goals and investment objectives you create an investment plan. You choose your stockbroker that suits your needs, but
when it is time to actually buy or sell securities in the securities market, it is important to understand how your transactions will be executed. Based
on your expectations regarding a specific transaction you have the option to select from three different order types: market order, limit order, or a
stoploss order.
Valerie is an experienced investor who enjoys researching and investing in individual stocks that appear promising. On August she is reviewing the
trading information for a new educational technology company ESolver, presented in the following table.
She would like to buy shares of stock at some point during the day if the price falls to $ therefore she places a
order at :
PM EDT. When she places a day order, if the price does not reach $ by the end of the day, her order will be
Her broker is able to execute the trade two hours later, obtaining her shares at $ each.
Suppose the price of the stock falls for the rest of the day, eventually closing at a price of $ In this case, the total value of the shares she
purchased
between the time of her purchase and the end of the day. If she had instead placed a
; order at : PM
and obtained the same number of shares at $ per share, she would have
by the end of the day instead.
Shen is another investor who currently owns shares of ESolver stock. He would like to place a particular kind of limit order, in which the order remains
in effect indefinitely, unless it is filled or canceled. This type of order is known as
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