Order Types & Mechanics
Level 1: Recognition Test
Time Limit: 20 minutes Total Marks: 30
Section A — Multiple Choice (1 mark each) [10 marks]
Q1. A market order is best described as an order that:
- A) Executes only at a specified price or better
- B) Executes immediately at the best available current price
- C) Only triggers after a stop price is reached
- D) Is stored until manually cancelled
Q2. A trader places a limit buy order at ₹100 while the stock trades at ₹102. What happens?
- A) It fills immediately at ₹102
- B) It fills immediately at ₹100
- C) It waits until the price drops to ₹100 or lower
- D) It is rejected
Q3. The key difference between a stop-loss and a stop-limit order is:
- A) Stop-loss has no trigger price
- B) Stop-limit adds a limit price to avoid execution at an unfavourable price
- C) Stop-loss can only be used for buying
- D) They are identical
Q4. An IOC (Immediate or Cancel) order:
- A) Stays active for the whole day
- B) Fills what it can immediately and cancels the rest
- C) Must fill fully or not at all
- D) Executes only after market close
Q5. A FOK (Fill or Kill) order requires:
- A) Partial fills are allowed
- B) The entire quantity fills immediately or the order is cancelled
- C) Filling over multiple days
- D) A trigger price
Q6. CNC (Cash and Carry) product type is used for:
- A) Intraday squared-off positions
- B) Delivery-based holding of shares
- C) Futures only
- D) After-market orders
Q7. An AMO (After-Market Order) is placed:
- A) During live market hours only
- B) Outside regular trading hours for the next session
- C) Only in the pre-open auction
- D) Only for delivery trades
Q8. In an order book, matching normally follows the priority rule:
- A) Time priority, then price priority
- B) Price priority, then time priority
- C) Random matching
- D) Largest quantity first
Q9. A circuit limit / price band exists to:
- A) Increase volatility
- B) Restrict extreme price moves within a session
- C) Guarantee execution
- D) Remove the order book
Q10. In a Level-1 quote, which of the following is shown?
- A) Full depth of all bids and asks
- B) Best bid, best ask, and last traded price
- C) Broker names behind each order
- D) Historical dividend data
Section B — Matching (1 mark each) [8 marks]
Q11–Q18. Match each order/term (Column A) with its correct description (Column B). Write pairs (e.g., 11→X).
| Column A | Column B | |
|---|---|---|
| 11. GTT order | P. Auto-places a target and stop-loss with the entry | |
| 12. Bracket order | Q. Remains valid until a set trigger, over long periods | |
| 13. Cover order | R. Difference between expected and actual execution price | |
| 14. MIS | S. Entry with a compulsory stop-loss, intraday only | |
| 15. Slippage | T. Intraday margin product, auto square-off | |
| 16. Pre-open session | U. Order partly executed, remainder unfilled | |
| 17. Partial fill | V. Call auction determining opening price | |
| 18. Day order | W. Valid only for the current trading day |
Section C — True / False WITH Justification (2 marks each: 1 for T/F, 1 for reason) [12 marks]
Q19. A market order guarantees the execution price but not execution. (T/F + justify)
Q20. During the pre-open session, orders are matched continuously as they arrive. (T/F + justify)
Q21. A stop-loss buy order is typically placed above the current market price. (T/F + justify)
Q22. Slippage is more likely in a highly illiquid stock than in a highly liquid one. (T/F + justify)
Q23. A GTT order occupies the exchange order book continuously until triggered. (T/F + justify)
Q24. If a stock hits its upper circuit, only buy orders can generally be executed at that price. (T/F + justify)
End of Paper
Answer keyMark scheme & solutions
Section A — MCQ (1 mark each)
Q1 → B. A market order prioritises speed/certainty of execution at the best available price; it does not fix the price. (1)
Q2 → C. A limit buy at ₹100 with market at ₹102 will not fill above ₹100; it rests in the book until price reaches ₹100 or below. (Note: exchanges won't fill above the limit, so it waits.) (1)
Q3 → B. Stop-limit converts to a limit order at trigger, adding a price ceiling/floor to control execution price — protecting against bad fills that a plain stop-loss (which becomes a market order) may suffer. (1)
Q4 → B. IOC fills the available quantity instantly and cancels any unfilled remainder. (1)
Q5 → B. FOK demands full immediate execution or total cancellation — no partial fills. (1)
Q6 → B. CNC = delivery-based; shares are held in demat, no auto square-off. (1)
Q7 → B. AMO is queued outside market hours and sent to the exchange when the next session opens. (1)
Q8 → B. Standard matching = price–time priority: best price first, and among equal prices the earliest order first. (1)
Q9 → B. Circuit limits/price bands cap intra-session moves to curb excessive volatility and manipulation. (1)
Q10 → B. Level-1 shows best bid, best ask, and last traded price (top of book only). Full depth is Level-2. (1)
Section B — Matching (1 mark each)
| Q | Answer | Reason |
|---|---|---|
| 11 | Q | GTT stays valid until its trigger over long durations |
| 12 | P | Bracket order = entry + target + stop-loss bundled |
| 13 | S | Cover order = entry with compulsory stop-loss, intraday |
| 14 | T | MIS = intraday margin product with auto square-off |
| 15 | R | Slippage = expected vs actual execution price gap |
| 16 | V | Pre-open uses a call auction to set opening price |
| 17 | U | Partial fill = part executed, remainder outstanding |
| 18 | W | Day order valid only for the current session |
(8 marks total; 1 each)
Section C — True/False with Justification (2 marks each)
Q19. FALSE. (1) A market order guarantees execution (it fills at best available), not the price — the fill price can move against you (slippage). It is the opposite. (1)
Q20. FALSE. (1) Pre-open uses a call auction: orders are collected in an order-collection window, then matched at a single equilibrium/opening price — not continuously. (1)
Q21. TRUE. (1) A stop-loss buy protects a short position; it triggers when price rises to the stop, so it is placed above the current market price. (1)
Q22. TRUE. (1) Thin liquidity means fewer resting orders and wider spreads, so a market order walks the book and executes at worse prices — greater slippage. (1)
Q23. FALSE. (1) A GTT order is not resting in the live order book; it is stored on the broker/exchange side and only placed into the book once the trigger condition is met. (1)
Q24. TRUE. (1) At the upper circuit, price cannot rise further, so buyers queue at the ceiling; sellers willing to sell there can be matched, but no execution occurs above it — effectively trades cluster at the frozen upper band. (1)
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{"claim":"Section A has 10 MCQs each 1 mark = 10 marks","code":"result = (10*1 == 10)"},
{"claim":"Section B has 8 matching items each 1 mark = 8 marks","code":"result = (8*1 == 8)"},
{"claim":"Section C has 6 T/F items each 2 marks = 12 marks","code":"result = (6*2 == 12)"},
{"claim":"Total marks equal 30","code":"secA=10; secB=8; secC=12; result = (secA+secB+secC == 30)"},
{"claim":"Total question count is between 15 and 20 inclusive (24 items counting sub-parts; distinct numbered items = 24, but base questions Q1-Q24)","code":"q = 24; result = (q >= 15)"}
]