header bg

Question:

Kate Johnson, CFA, owns shares of a stock that currently trades at $15. If Johnson wants to buy more shares if the price increases to $17, she should enter a:

A stop buy order at $17.
Explaination

An order to buy if a price increases to a specified level is a stop buy order. A limit order at $17 will execute immediately if the market price is $15. A market order does not specify a price, but is executed at the prevailing market price.