Understanding Market Orders in Equity Market Microstructure

In the context of equity market structure, understanding market microstructure is essential for analyzing how securities are traded and how their prices are formed. Consider a scenario in which a portfolio manager is evaluating the impact of various order types on trading costs and execution quality.

The manager learns about three common order types: market orders, limit orders, and stop orders. Each of these order types has distinct characteristics that can affect the timing and price of executions in the market.

Based on this information, which of the following statements about these order types is correct?