Which of the following orders instructs the broker to sell at or above a specified price?

Question

BlackTom AI · Accepted Answer

A limit-sell order instructs a broker to sell shares only at a specified minimum price or better (higher).

1. Relevant knowledge points and concepts
- Limit-sell order: sell only at the limit price or a higher price. Protects seller from receiving less than desired.
- Limit-buy order: buy only at the limit price or lower.
- Stop-buy (stop order): becomes a market buy order when the stop price is reached; used to buy as price rises.
- Market order: execute immediately at the best available current market price (no price guarantee).
- Discretionary order: gives the broker limited authority to choose execution timing/price within preset parameters; it is not a fixed “sell at or above X” instruction.

2. Step-by-step reasoning
- The question requires an instruction that directs the broker to sell at or above a specified price.
- Compare definitions: a limit-sell explicitly requires selling at the limit price or higher, matching the requirement exactly.
- Example to illustrate: current market price = $50. If an investor places a limit-sell at $55, the broker must not sell for less than $55; execution will occur only if the market reaches $55 or higher.
- Check alternatives: limit-buy would require buying at or below a price (opposite action); stop-buy converts to a market buy once triggered (not a conditional sell at/above a price); market order sells immediately at whatever price is available (no “at or above” guarantee); discretionary order delegates judgment and does not strictly enforce “at or above” a fixed price.

3. Calculations / intermediate steps (numerical example)
- Market = $50; limit-sell = $55.
- Execution condition: execute if market price >= $55.
- If market rises to $56 → order executes (>= $55). If market stays at $54 → no execution (< $55).

4. Why the correct answer is correct
- The limit-sell’s core rule is to prevent sale below the specified limit, i.e., only sell at the limit price or better (above), exactly matching the prompt.

5. Why other options are incorrect (brief)
- Limit-buy: buys at or below a price (opposite).
- Discretionary: broker has leeway; not a strict “sell at or above” instruction.
- Stop-buy: triggers a buy order when price rises to the stop, not a conditional sell.
- Market order: executes immediately at current price, not conditional on being at/above a specified price.

Conclusion: The correct choice is Limit-sell order, which matches the provided answer.

Which of the following orders instructs the broker to sell at or above a specified price?Single choice

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