Which of the following orders instructs the broker to buy at or below a specified price?

Question

BlackTom AI · Accepted Answer

A limit-buy order instructs the broker to buy a security at a specified maximum price or any price lower.

1. Relevant knowledge points and concepts
- Limit-buy order: an instruction to buy at a specified price (the limit) or better (i.e., at that price or lower). It guarantees price but not execution.
- Stop-buy order: becomes a market order once a specified stop price is reached; used to buy as the price is rising (often to enter on a breakout or to limit losses on a short sale).
- Market order: executes immediately at the best available market price; no price protection.
- Discretionary order: gives the broker limited authority to choose the execution price/time within parameters set by the client.
- “Limit-loss order”: not a standard term; likely a misnomer for stop-loss or sell-limit, and does not describe buying at or below a set price.

2. Step-by-step reasoning
- The question asks for the order type that instructs a broker to buy at or below a specified price.
- Compare definitions: a limit-buy explicitly sets a maximum price the buyer will accept; execution occurs only at that price or lower.
- Stop-buy triggers a market order when price hits the stop (it does not instruct buying at or below a specified price).
- Market and discretionary orders do not set a firm maximum execution price.

3. Calculations
- No numerical calculation required; the logic is definitional: limit-buy → buy ≤ limit price.

4. Why the correct answer is correct
- A limit-buy order places a ceiling on the purchase price, ensuring the investor does not pay more than the specified limit. That directly matches “buy at or below a specified price.”

5. Why the other options are incorrect (briefly)
- Limit-loss order: not a standard buy instruction and typically not used to mean buy-at-or-below.
- Discretionary order: gives the broker leeway; does not guarantee a specific maximum price.
- Stop-buy order: triggers a market order when reached, so execution price can be above the stop.
- Market order: executes immediately at current market price with no specified maximum.

6. Conclusion
- Therefore, the correct choice is Limit-buy order, which matches the provided answer.

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

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