Chapter 9 Flashcards
What is a margin?
it is the amount of money the the investor must personally provide
What is the minimum margin amount for long positions?
Initial cost of the transaction - loan amount.
What is margin call vs Excess margin?
margin call: must immediately deposit additional money
excess margin: has access to additional funds in the account immediately
Why does short selling have an element of leverage?
because you must borrow stock from the dealer and put up less money than minimum balance required. no money is loaned to client, only stock.
How often does the TSX and TSX venture compile and report short positions?
2 times a month
What are the rules regarding short sale of securities
The IA must mark the sell order ticket short (or S) so that the trading department knows it is a short.
What is a market order?
order to buy/sell a specified number of securities at the prevailing market rate
What is limit order
ORder to buy or sell securities at a specified price or better
What is a day order
Order to buy/sell that expires at the end of the day. all orders are day orders unless otherwise specified
What are good til orders
Order that expires on specified date
what is good till cancelled order
Order that expires in 90 calendar days unless the investor decides to cancel the trade sooner
What is on-stop sell order
AKA stop loss order. used in connection with a sell order where the limit price is below existing market price. (protects part of the paper profits)
What is on-stop buy order
AKA stop buy order. order to buy a stock at or above a certain price. Can be used to protect short position when price is rising or purchase stock when price is rising
