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Answer: Execute at the best available price once a trade occurs at the specified price or a better price.
A market-if-touched order is a type of trading order that is designed to execute at the best available price once a trade occurs at the specified price or a better price. This order type is used when a trader wants to close out a position but only if the market reaches a certain price level. It is different from a stop order, which executes at the best available price once a bid/offer occurs at the specified or worse price, or a discretionary order, which allows a broker to delay execution of the order to get a better price. Additionally, a fill-or-kill order is an order that must be executed immediately in its entirety or not at all. In the context of the question, the portfolio manager wants to close out a long position in a futures contract using a market-if-touched order, which means they would like the order to execute at the best available price once a trade occurs at the specified price or a better price, making option A the correct choice.
Author: LeetQuiz Editorial Team
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An asset management firm’s portfolio manager is conducting an evaluation of the current portfolio to determine if it aligns with the firm’s revised market forecasts and ideal asset allocation. During this assessment, the portfolio manager identifies a long position in a futures contract that is inconsistent with the portfolio’s objectives. The manager plans to exit this position by using a market-if-touched order. Which of the following actions would correctly utilize this order type?
A
Execute at the best available price once a trade occurs at the specified price or a better price.
B
Execute at the best available price once a bid or offer occurs at the specified price or a worse price.
C
Allow a broker to delay execution of the order to get a better price.
D
Execute the order immediately or not at all.
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