If you want to buy only if the price is at or below a certain price, which order would you place?

• A. Market Order
• B. Limit Order
• C. Stop Order
• D. Short Selling

Answer: (B)

A limit buy order is used when you want to control the maximum price you’re willing to pay. It specifies a price you won’t exceed, so the purchase only happens if the market price is at or below that level. If the stock never trades down to your limit, the order stays unfilled, which is the trade-off for price discipline. This is exactly the scenario described: you want to buy only if the price is at or below a certain amount.

In contrast, a market order would execute immediately at the best available price, which could be higher than your limit. A stop order is triggered when the price reaches a specified level and then becomes a market (or sometimes a limit) order, not simply a price cap for buying. Short selling involves selling borrowed shares to profit from a price decline, not placing a purchase at a maximum price.