PRICE LIMIT Meaning and
Definition
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Price Limit refers to the maximum or minimum price set by market authorities or regulatory bodies to regulate or control trading activities within a financial market. It acts as a boundary or restriction on the price at which a particular security can be bought or sold during a given trading session.
In the context of the stock market, a price limit is often implemented to prevent extreme price fluctuations or to ensure stability and mitigate excessive volatility. When the price of a security reaches the set limit, trading is either halted or restricted within a specified range. This limit helps prevent panic selling or buying due to sudden market movements or external factors, protecting investors from potential losses and maintaining market integrity.
Price limits can differ based on the type of financial instrument, market conditions, or specific regulations imposed by the governing authorities. In some cases, price limits may also adjust dynamically based on predefined rules or circuit breakers triggered by significant price movements or trading volumes. By setting a price limit, market participants can have a clearer idea of the potential risks and rewards associated with a particular security, facilitating better decision-making and reducing the likelihood of market manipulation or speculative activities.
Common Misspellings for PRICE LIMIT
- orice limit
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- 0rice limit
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- pdice limit
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- ptice limit
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Etymology of PRICE LIMIT
The word "price" comes from the Old French word "pris", which means "value" or "worth". It ultimately has its roots in the Latin word "pretium", meaning "price" or "value".
The word "limit" has its origins in Middle English and can be traced back to the Latin word "limitare", meaning "to restrict" or "to mark out". It is related to the Latin word "limes", which refers to a boundary or border.
Therefore, the etymology of the term "price limit" suggests that it refers to the value or worth that is restricted or marked out, indicating the maximum price that can be set for a particular item or service.
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