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    Question

    To limit the loss on a security a buy or sell order, which gets triggered automatically, once the stock reaches a certain price, is called - 

    A Sales order Correct Answer Incorrect Answer
    B Auto Purchase order Correct Answer Incorrect Answer
    C Stop-loss order Correct Answer Incorrect Answer
    D Buyer's order Correct Answer Incorrect Answer
    E Investor’s order Correct Answer Incorrect Answer

    Solution

    Stop-loss order (also called a stop order or stop market order) is an instruction placed with a broker to buy or sell once the stock reaches a certain price. A stop-loss limits an investor's loss on a security position. For example setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss to 10%. If you have purchased shares of SBI at Rs.500 and given stop-loss instruction for 10%, the broker will sell your shares if share price reaches Rs.450.

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