Fill or Kill (FOK)

C is correct. The entire FOK order will be cancelled immediately because the full 50,000 shares cannot be executed at the $42.55 limit price or better. While 30,000 shares are available at $42.50 (which meets the limit) and another 25,000 shares are available at $42.60 (which exceeds the limit), the FOK instruction requires that ALL 50,000 shares be filled immediately at the limit price or better. Since only 30,000 shares meet this requirement, the entire order is cancelled with zero execution.

A is incorrect because FOK orders do not allow partial fills. The order cannot execute 30,000 shares at $42.50 and then continue. Even though executing 30,000 at $42.50 and 20,000 at $42.55 would total 50,000 shares within the limit, the $42.60 ask price exceeds the $42.55 limit. B is incorrect because FOK orders never remain pending. they either execute in full immediately or are cancelled completely. There is no "remaining" portion. D is incorrect because FOK orders maintain their limit price constraint and do not convert to market orders. If the limit cannot be met with a complete immediate fill, the order is cancelled.

B is correct. The two defining characteristics of a FOK order are: (1) immediate execution required (no waiting period), and (2) complete fill required (all shares or none). If both conditions cannot be met simultaneously, the entire order is cancelled immediately. This makes FOK orders highly restrictive but valuable for strategies requiring complete positions instantly.

A is incorrect because FOK orders do not require market price execution (they can have limit prices) and they specifically do NOT allow partial fills (all-or-nothing requirement). C is incorrect because FOK orders cannot wait for favorable prices. the "immediate" requirement means they must execute instantly or be cancelled. While the complete fill requirement is correct, the waiting component contradicts the FOK definition. D is incorrect because FOK orders are not limited to the first hour of trading (they can be placed anytime during market hours), and they do not allow partial fills.

B is correct. Arbitrage trading is the ideal use case for FOK orders. When an arbitrage trader needs exactly 5,000 shares to match a corresponding short position, partial fills create unhedged risk. The FOK order ensures the trader either gets the complete 5,000-share hedge immediately (locking in the arbitrage profit) or gets nothing (avoiding an incomplete hedge that would expose them to market risk). The immediate execution requirement matches the time-sensitive nature of arbitrage opportunities.

A is incorrect because accumulating shares "over the next week" contradicts the immediate execution requirement of FOK orders. This investor has time flexibility and would be better served by a limit order with GTC time-in-force, or multiple smaller orders. B is also unsuitable because FOK orders do not wait. C is incorrect because waiting "several days" for a specific price contradicts the FOK immediate execution requirement. This scenario calls for a limit order with day or GTC time-in-force, not a FOK order. D is incorrect because accepting "partial fills" directly contradicts the all-or-nothing requirement of FOK orders. This trader should use an IOC (Immediate or Cancel) order, which allows partial fills, or a standard limit/market order.

C is correct (the EXCEPT answer). This statement is FALSE. FOK orders do NOT remain active for any period of time. The "immediate" execution requirement means the order must execute in full instantly or be cancelled completely. There is no waiting period, not even for minutes or seconds, let alone an entire trading day. If the order cannot be filled in its entirety immediately, it is cancelled.

A is accurate: this correctly describes the two core requirements of FOK orders—immediate execution and complete fill, or total cancellation. This is the defining characteristic. B is accurate: FOK orders have an absolute prohibition on partial fills. It is all 10,000 shares or zero shares, never 7,000 shares. This all-or-nothing requirement distinguishes FOK from IOC (Immediate or Cancel) orders, which do allow partial fills. D is accurate: arbitrage strategies commonly use FOK orders because incomplete fills create unhedged positions that expose traders to market risk. Arbitrage opportunities are time-sensitive and require precise position sizing, making FOK orders ideal.

A is correct. Only statement 2 is accurate.

Statement 1 is FALSE: FOK orders do NOT allow partial fills under any circumstances. The order will not execute for 5,000 shares and cancel the remainder. Instead, because the full 8,000 shares are not immediately available at $35.00 or better, the entire order is cancelled with zero execution. No partial fill occurs.

Statement 2 is TRUE: The entire order will be cancelled immediately. While 5,000 shares are available at $35.00 (meeting the limit), only 5,000 of the required 8,000 shares can be filled at the limit price or better. The next 3,000 shares would require paying $35.05, which exceeds the $35.00 limit. Since the FOK order requires immediate execution of all 8,000 shares at $35.00 or better, and this is impossible, the entire order is cancelled immediately.

Statement 3 is FALSE: FOK orders require IMMEDIATE execution. "In the next few seconds" is too long. FOK orders do not wait even momentarily. The order must execute in full instantly (typically within milliseconds) or be cancelled. There is no waiting period for market conditions to improve.

Statement 4 is FALSE: While 9,000 total shares are available across two price levels ($35.00 and $35.05), only 5,000 shares are available at the $35.00 limit price. The $35.05 ask price exceeds the limit, so those 4,000 shares cannot be used to fill this order. FOK orders do not guarantee execution; they require specific conditions (immediate availability of the full quantity at the limit price or better) that may not exist.