Series 7 Exam Question 120: Answer and Explanation

Question: 120

Which of the following types of orders becomes a market order as soon as a security passes a specified price?

  • A. Stop
  • B. Limit
  • C. Market
  • D. Stop-limit

Correct Answer: A

Explanation:

A. Stop orders become market orders for immediate execution once the underlying security touches or passes the price on the stop order. A stop-limit order becomes a limit order once the underlying security touches or passes the stop price.

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