Western Governors University (WGU) FINC6000 C214 Financial Management Practice Exam

A limit order to buy a stock is executed only when the stock can be purchased at the specified price or lower. When an investor places a limit order to buy at $101.55, they are indicating that they are willing to purchase the stock at that price, or at any lower price, but not above $101.55.

For execution of this order, the current ask price—essentially the lowest price a seller is willing to accept—must be at or below $101.55. If the ask price is higher than $101.55, the order will not execute, as the investor is not willing to pay a premium over their specified limit. This ensures the investor's price requirement is met for the transaction to take place, aligning with their investment strategy.

The other choices do not reflect the mechanics of limit orders correctly, as they impose conditions that would either prevent fulfilling the investor's price criteria or refer to timing rather than price.