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Question:
Consider the following statements:
Statement 1: A stop‐loss buy order is placed above the current market price.
Statement 2: A marketable limit sell order is placed below the best bid.
Which of the following is most likely?
A
Both statements are correct.
explanation
•A stop‐loss buy order is placed above the current market price by a short seller to limit her losses.
• A marketable limit sell order is placed below the best bid so it (at least partially) executes immediately.
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