An investor's order that instructs a broker to execute a transaction at a specified price is called a ...

An investor's order that instructs a broker to execute a transaction at a specified price is called a ...

• A. Market Order
• B. Limit Order
• C. Executive Order
• D. Stop Order

Answer: (B)

This question tests understanding of price-specific orders. A limit order is used when an investor wants to buy or sell only at a specified price (or better). It guarantees the execution price but not the likelihood of execution if the market never reaches that price. In this scenario, the investor instructs the broker to execute at a fixed price, which is exactly what a limit order does. By contrast, a market order trades immediately at the current price but offers no price guarantee, a stop order triggers at a certain price and then often becomes a market order, and an executive order is not a trading instruction. So the best fit is a limit order.

This question tests understanding of price-specific orders. A limit order is used when an investor wants to buy or sell only at a specified price (or better). It guarantees the execution price but not the likelihood of execution if the market never reaches that price. In this scenario, the investor instructs the broker to execute at a fixed price, which is exactly what a limit order does. By contrast, a market order trades immediately at the current price but offers no price guarantee, a stop order triggers at a certain price and then often becomes a market order, and an executive order is not a trading instruction. So the best fit is a limit order.