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# Market Orders

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1) Order Types Suppose Dell is currently trading at \$65. You think if it reaches \$70 ,it will continue to climb, so you want to buy it if and when it gets there. Should you submit a limit order to buy at \$70?
2). Order books You find the following order book on a particular stock. The last trade on the stock was at \$81.03.

Shares Price Shares Price
350 \$ 81.01 100 \$ 81.04
100 \$ 81.00 600 \$ 81.05
900 \$ 80.98 1000 \$ 81.07
75 \$ 80.96 700 \$ 81.08
900 \$ 81.10

a. If you place a market buy order for 100 shares, at what price will it be filled?
b. If you place a market sell order for 100 shares, at what price will it be filled?
c. Suppose you place a market order to buy 400 shares. At what price will it be filled?

#### Solution Preview

1) No, you will not be using a limit order for this transaction. Instead, you will use a "buy stop order" to buy Dell at 70.

A buy stop order is an order to buy a security which is entered in at a price above the current offering price, like 70 in the case of Dell which is trading at 65. It is triggered when the market price touches or goes through the buy stop price.

But ...

#### Solution Summary

A buy stop order is an order to buy a security which is entered in at a price above the current offering price, like 70 in the case of Dell which is trading at 65.

\$2.19