If an investor is attempting to buy a stock that is very volatile,it would be best to use a:
A)market order
B)limit order
C)stop-loss order
D)contingency order

Question

Quizplus · Accepted Answer

A market order would execute immediately at the current market price, but with a volatile stock, the price can fluctuate rapidly and drastically, leading to potential losses. A stop-loss order would only execute once the stock reaches a certain price, which may be good for minimizing losses but could also result in missed opportunities for gains. A contingency order is used to execute one trade based on the outcome of another trade, and may not be applicable here.

Therefore, a limit order would be the best choice as it allows the investor to specify the maximum price they are willing to pay for the stock. This ensures that they will not purchase the stock at an inflated price due to sudden price spikes.

If an Investor Is Attempting to Buy a Stock That