Order Types & Mechanics

Q1. (4 marks)

• Market order: an order to buy/sell immediately at the best currently available price. (1) Advantage: guaranteed/fast execution. (1)
• Limit order: an order to buy/sell at a specified price or better; executes only if the market reaches that price. (1) Advantage: price control / protection from bad fills. (1) Why: market prioritises speed, limit prioritises price.

Q2. (4 marks)

• SL-M: once the trigger price is hit, it becomes a market order and fills at best available price. (1.5)
• SL (stop-limit): once the trigger is hit, it becomes a limit order at a set limit price. (1.5)
• Failure case: in a fast-moving market the price gaps past the limit price, so the limit order never fills and the loss is not capped. (1)

Q3. (3 marks)

• GTT is an order that remains inactive until a trigger condition (price) is met, then places the actual order. (1.5)
• Difference: a normal day order expires at day-end if unfilled, whereas a GTT stays valid for a long period (e.g. up to a year) until triggered or cancelled. (1.5)

Q4. (4 marks) — 1 mark each correct match; 1 mark for the unused item.

• (a) IOC → (iii) (1)
• (b) FOK → (i) (1)
• (c) Day → (ii) (1)
• Unused description: none of the three is unused given three types — the "unused" note is a check; all three map, so state all descriptions are used. (1) (Accept: candidate correctly notes each type has exactly one match.)

Q5. (4 marks)

• CNC: delivery-based; shares held in demat, no auto square-off, requires full funds. (1.5)
• MIS: intraday, leveraged, must be closed same day. (1.5)
• If untouched, an open MIS position is auto square-off by the broker before close (at market). (1)

Q6. (4 marks)

• Lower circuit = 250 \times (1 - 0.10) = 250 \times 0.90 = \225$. (2)
• Upper circuit = 250 \times 1.10 = \275$. (1)
• Price band range: \225$to$$275$. (1)

Q7. (4 marks)

• (a) Spread = 101.35 - 101.20 = \0.15$. (2)
• (b) Market buy fills at the best ask = \101.35$; ask size 300 covers the full 300 shares. Cost$= 101.35 \times 300 = $30{,}405$. (2)

Q8. (4 marks)

• Slippage: the difference between the expected/quoted execution price and the actual filled price. (1.5)
• Absolute slippage = 503 - 500 = \3$. (1.5)
• Percentage $= \frac{3}{500} \times 100 = 0.6\%$. (1)

Q9. (4 marks)

• Pre-open session runs before continuous trading (e.g. 9:00–9:15 in NSE): orders collected, no immediate matching. (2)
• Call auction aggregates all buy/sell orders and determines a single equilibrium opening price that maximises tradable volume, reducing opening volatility. (2)

Q10. (5 marks)

• Bracket order: an intraday order with three legs — the entry order plus an automatically attached target (profit) and stop-loss; may include a trailing stop-loss. (2.5)
• Cover order: an intraday order with two legs — the entry order plus a compulsory stop-loss only (no target). (2.5) Why: bracket = both target+SL; cover = SL only, giving less flexibility but higher leverage.

[
  {"claim":"Lower circuit price at 10% band from 250 is 225","code":"lc=250*(1-0.10); result = (lc==225)"},
  {"claim":"Upper circuit price at 10% band from 250 is 275","code":"uc=250*(1+0.10); result = (uc==275)"},
  {"claim":"Bid-ask spread is 0.15","code":"spread=Rational('101.35')-Rational('101.20'); result = (spread==Rational('0.15'))"},
  {"claim":"Market buy 300 shares at ask 101.35 costs 30405","code":"cost=Rational('101.35')*300; result = (cost==30405)"},
  {"claim":"Slippage percentage from 500 to 503 is 0.6%","code":"pct=(Rational(503)-500)/500*100; result = (pct==Rational('0.6'))"}
]