n NISM Certifications
XXI NISM Series XXI-A
Medium

The primary purpose of a "Stop Loss" order is to:

Practice question from NISM XXI A for PMS - Mock Test 1 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Maximize profits

  2. Limit potential losses on a trade

    Correct answer

  3. C

    Guarantee a minimum return

  4. D

    Ensure execution at a specific price

Why this is the answer

Stop loss orders automatically sell an asset when it reaches a certain price to prevent further losses.

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