On September 16, Marya places a limit order to buy 3,000 shares of Dai

QUESTION

On September 16, Marya places a limit order to buy 3,000 shares of Dairy Deelite Inc. stock with a threshold price of $9.00. Which of the following describes the trade made by her broker?

A) 3,000 shares of Dairy Deelite were sold at $9.45 on September 16.
B) 3,000 shares of Dairy Deelite were purchased at $9.15 on September 16.
C) 3,000 shares of Dairy Deelite were purchased at $8.89 on September 19
D) 3,000 shares of Dairy Deelite were purchased at $8.94 on September 16.
E) 3,000 shares of Dairy Deelite were purchased at $9.10 on September 17.

ANSWER

Answer: D
Explanation: D) In a limit order for buying stock, the broker is directed to purchase the shares only when the market price is below the price stated in the order. Investors want to buy stocks at lower prices and sell them at higher prices to maximize profits. Limit order are only good for one day, so this order had to be executed on September 16.