You purchased XYZ share at $50 per share. The share is currently selling at $65. Your gains could be protected by placing a ________.

Question

Quizplus · Accepted Answer

To protect gains, a stop-loss order is the best choice. This is an order placed with a broker to sell the security when it reaches a specific price, thereby limiting the potential loss. In this case, a stop-loss order can be set at a price just below the current market price of $65 to ensure that the gains are protected. A limit-buy order is used to purchase a security at a specific price, while a limit-sell order is used to sell a security at a specific price. A market order is an order to buy or sell a security at the best available price. However, none of these orders would provide adequate protection for gains in the given scenario.

You Purchased XYZ Share at $50 Per Share