Open Order

### An open order remains active until it is executed or: - [x] Canceled - [ ] Reviewed by a broker - [ ] Transferred to a different account - [ ] Declared void by the exchange > **Explanation:** An open order will remain active until it is either executed when the conditions are met, or it is manually canceled by the trader or automatically based on set conditions. ### Which of the following orders will remain open indefinitely unless manually canceled or filled? - [x] Good-Till-Canceled (GTC) Order - [ ] Day Order - [ ] Immediate-Or-Cancel (IOC) Order - [ ] Fill-Or-Kill (FOK) Order > **Explanation:** A GTC order remains open until it is filled by meeting the specified conditions or canceled manually by the trader. ### What is a key characteristic of a limit order that makes it an open order type? - [x] It executes only at the specified price or better. - [ ] It executes immediately at the current market price. - [ ] It expires at the end of the trading day. - [ ] It is intended for after-hours trading. > **Explanation:** A limit order will execute only at the specified price or better, making it an open order type if the condition is not immediately met. ### Can an open order influence the price of a stock? - [x] Yes, especially if the volume is significant. - [ ] No, open orders do not affect stock prices. - [ ] Only in international markets. - [ ] Only when placed by institutional investors. > **Explanation:** Large open orders can influence the price of a stock if the volume is significant, affecting market supply and demand. ### How can you modify an open order on most brokerage platforms? - [ ] By submitting a new trade ticket. - [x] By adjusting the order parameters directly through the platform interface. - [ ] By contacting the exchange directly. - [ ] It cannot be modified once placed. > **Explanation:** Most brokerage platforms allow investors to directly modify the parameters of an open order through the platform's interface. ### What risk is associated with leaving an open order unattended? - [ ] It will be automatically executed at any arbitrary price. - [x] Market conditions can change, potentially leading to unfavorable outcomes. - [ ] The broker might cancel without notice. - [ ] It will not be executed even if conditions are met. > **Explanation:** Unattended open orders can lead to unfavorable outcomes as market conditions can change, affecting the price at which the order is eventually executed. ### To avoid risks associated with open orders, an investor should: - [x] Regularly monitor and adjust the orders as needed. - [ ] Keep all orders open indefinitely. - [ ] Delegate all decisions to the broker. - [ ] Avoid using open orders altogether. > **Explanation:** Regularly monitoring and adjusting open orders as needed helps mitigate potential risks associated with fluctuating market conditions. ### What is a stop order? - [x] An order to buy or sell a security once its price reaches a specified level. - [ ] An order that must be executed immediately. - [ ] An order to keep a security until it appreciates in value. - [ ] A daily order executed at market closing. > **Explanation:** A stop order is an order to buy or sell a security once its price reaches a specified stop level. ### Which statement is true regarding open orders and day orders? - [x] Day orders expire at the end of the trading day, whereas open orders may not. - [ ] Open orders expire at the end of the trading day, similar to day orders. - [ ] Both open orders and day orders remain active indefinitely. - [ ] Day orders renew automatically every day. > **Explanation:** Day orders expire at the end of the trading day, while open orders, such as GTC orders, remain active until executed or canceled. ### Who is primarily responsible for canceling an open order if an investor chooses to withdraw it? - [ ] The stock exchange - [ ] The market regulator - [ ] The issuing company - [x] The investor > **Explanation:** The investor is primarily responsible for canceling an open order if they choose to withdraw it from the market.