Stop orders are orders to
A)automatically buy if the stock price falls to a certain price.
B)automatically sell if the stock price falls to a certain price.
C)automatically sell if bond interest rates fall.
D)automatically buy if bond interest rates fall.

Question

Quizplus · Accepted Answer

Stop orders are typically used as a risk management tool to limit losses. A stop sell order would automatically sell the stock if the price fell to a certain level, thereby limiting further losses. Option A, automatically buying if the stock price falls, would not make sense as it would be buying at a lower price. Options C and D are not relevant to stop orders as they are related to bond interest rates, not stock prices.

Stop Orders Are Orders to