Jacques Fontenot wants to place an order to purchase 10,000 shares of BQ Inc. at a price of ‚¬75.00 or below. The shares are currently trading for ‚¬82.1 bid and ‚¬.82.2 ask. What type of order should Fontenot place?
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A. B. C.C
Based on the given information, Jacques Fontenot wants to purchase 10,000 shares of BQ Inc. at a price of 75.00 or below. The current market price for the shares is 82.1 bid and 82.2 ask.
To understand the different types of orders and determine the appropriate one for Jacques Fontenot, let's discuss the options:
A. Market order: A market order is an instruction to buy or sell a security at the best available price in the market. It does not specify a particular price. In this case, a market order would not be suitable for Fontenot because he wants to buy the shares at a specific price of 75.00 or below, and a market order might execute at a higher price.
B. Stop loss order: A stop loss order is designed to limit an investor's loss on a security position. It becomes a market order to sell when the security's price reaches a specified stop price. Since Fontenot wants to buy shares, a stop loss order is not appropriate for his objective.
C. Limit order: A limit order is an instruction to buy or sell a security at a specified price or better. In this case, Fontenot wants to purchase 10,000 shares of BQ Inc. at a price of 75.00 or below. By placing a limit order with a limit price of 75.00, Fontenot ensures that his order will only be executed if the price is 75.00 or lower. If the current bid and ask prices are 82.1 and 82.2 respectively, a limit order at 75.00 will wait until the price reaches that level or lower before executing the trade. This allows Fontenot to have control over the price at which he purchases the shares.
Therefore, the most appropriate type of order for Jacques Fontenot to place in this situation is C. Limit order.