Market Orders vs. Limit Orders: Execution Priority and Certainty
Which statement correctly distinguishes a market order from a limit order?
A market order is executed immediately at the best available prevailing market price (execution is guaranteed, price is not).
Complete Analysis & Legal Rationale
A market order is executed immediately at the best available prevailing market price (execution is guaranteed, price is not). A limit order specifies a maximum purchase price or minimum sale price (price is guaranteed if executed, but execution is never guaranteed).
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Accurately contrasts certainty of execution (market) with certainty of price (limit).
Inverts the definitions of market and limit orders.
Limit orders will not execute if market price does not reach the limit.
Day limit orders remain open until 4:00 p.m. ET; GTC orders remain open until cancelled.
Official Standard: Standard execution guarantees and price constraints.