Question

Here is some price information on Marriott:

You have placed a stop-loss order to sell at $20. What are you telling your broker? Given market prices, will your order be executed?

Short answer

To sell Marriott stock at a bid price of $20 or less; Broker will attempt to execute, but may not be able to sell

Step-by-step solution

Definition

To prevent further losses, the stop-loss order lets the stocks to be sold out if their prices fall down below a certain level.

Explanation on the situation

The broker is instructed to attempt to sell Marriott stock at a bid price of $20 or less. Here, the broker will attempt to execute, but may not be able to sell at $20, since the bid price is now $19.95. The price at which it is sold may be more or less than $20 because the stop-loss becomes a market order to sell at current market prices.