Sally has researched GLE and wants to pay no more than $50 for the stock. Currently, GLE is trading in the market for $54. Sally would be best served to:
A)buy using a limit order.
B)buy using a market order.
C)use the bid-ask spread to her advantage.
D)None of these.

Question

Quizplus · Accepted Answer

Sally should use a limit order to buy GLE at her desired price of $50 or lower. This will ensure that she does not pay more than she is willing to for the stock. Using a market order could result in her buying the stock at the current market price of $54 or higher, which is not in line with her research and investment strategy. Using the bid-ask spread to her advantage is not a feasible option in this scenario as the spread would not allow her to purchase the stock at her desired price of $50 or lower.

Sally Has Researched GLE and Wants to Pay No More