Which of the following statements concerning market and limit orders are correct?
I. Market orders guarantee both a price and an execution.
II. Market orders guarantee an execution but not a price.
III. Limit orders guarantee a price but not an execution.
IV. Stop-loss orders may never be executed.

Question

Quizplus · Accepted Answer

Statement I is incorrect as market orders do not guarantee a specific price, only an execution at the best available price. Statement II is correct as market orders prioritize execution over price. Statement III is correct as limit orders guarantee a specific price but may not be executed if the market does not reach that price. Statement IV is also correct as stop-loss orders may not be executed if the price never reaches the designated stop-loss level.

Which of the Following Statements Concerning Market and Limit Orders