Question

Garret wants to buy shares of an iron manufacturing company, but he does not want to pay a high price for them. He asks his securities broker to only buy shares that come within the price of $300 and $400. In this scenario, Garret places a _____ with his broker.

Answer 1

Limit order

Step-by-step explanation:

Limit order refers to a kind of order to purchase and sell securities at a stipulated price or lower or higher as the case may be. If a person wants to buy securities, he may place a limit on purchase price. Any price below the limit is fine but not above it. Similarly, seller would place limit of selling price as he is not willing to sell below that point.

Here, Garret places order limit with his broker as he asks his broker to buy securities within price race range of $300 to $400. So he should not purchase if price go beyond $400.