A buy stop may protect an investor against losses in a short position, and a sell stop may protect an investor's profits on stock she holds long.
Which of the following statements about stop orders are TRUE?
A stop order will become a market order once a security trades at a specific price.
A sell stop order is always placed at a price that is below the current market price.
A stop order to buy is always set at a price that is higher than the current market price.
A) I and III.
B) II and III.
C) I, II and III.
D) I and II.
Answer: C) I, II and III.