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CFA Level 2
Equity Investments

Choosing the Right Order Type for Trading

Medium Equity Market Structure Order Types And Instructions

Alice is an experienced equity trader working for a large investment firm. She is currently analyzing a volatile stock that she believes could move significantly in the next hour. Given her assessment, she considers different types of orders to enter the market.

Alice is particularly interested in placing an order that guarantees her a buying price while still allowing her to capitalize on potential fluctuations in the stock's price. She is also aware that certain orders have particular characteristics that can lead to different outcomes depending on market conditions.

Which type of order should Alice use to ensure that she buys the stock without surpassing her maximum acceptable price, while still being able to take advantage of any upward price movements during the hour?

Hint

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% Correct97%