LOS 39.g/h Flashcards
(14 cards)
What is the bid and offer/ask price?
Bid price = price dealer will buy a security
Ask Price = price dealer will sell a security
What instructions can be in investor orders
execution instructions = how to trade
validity instruction = when the order can be filled
clearing instructions = how to settle the trade
What’s the difference between a market order and limit order?
Market order = instructions broker to execute the trade immediately
Limit order = places a minimum execution price on sell orders, and maximum execution price on buy orders
What does it mean to aggressively price something
A limit buy order above the best bid or a limit sell order that is below the best ask
What does it mean to make a new market or be inside a market
These are limit orders that are between the best bid and the best ask
What does it mean to be far from the market
Said of prices specified in orders that are worse than the best current price; e.g., for a limit buy order, a limit price below the best bid.
What is an All or nothing order?
An order that includes the instruction to trade only if the trade fills the entire quantity (size) specified.
What’s a hidden order?
An order that is not exposed to the public but only to the brokers/exchanged - in order not to move the market
What is a day order?
Expire if unfilled by the end of the trading day
What is a Immediate-or-cance
Orders are cancelled unless they can be filled immediately.
What are good-on-close orders?
Orders are only filled at the end of the trading day. If they are market orders, they are referred to as market-on-close orders. These are often used by mutual funds because their portfolios are valued using closing prices.
What is a stop buy order?
Who would use it?
- An order to purchase a security once it’s price reaches a specified stop price, which is set above the market price.
- Used to limit losses from an increasing stock price
Confirmation that a stock is moving upwaeds.
What is a stop sell order?
An order to sell a security once it’s price falls to a certain value.
