Csc- Chpt 9

Front 1

Cash Account

Back 1

securities transactions are made through cash or margin accounts
cash accounts- make full payment for purchase or full delivery on of before the settlement date
GOC TBILLS settlement date- same day
GOC Bonds Term <3years- 2 business day
other securities- 3 days

Front 2

Margin accounts

Back 2

accounts used for those who want to buy/sell securities on credit and initially only pay part of the full price- dealer member lends the remainder of the transaction price to the client, charging interest on this loan
** difference is granting credit

Front 3

long vs shrot position

Back 3

long- own the securities, selling shares you own
short- sells securities that he/she does own

Front 4

free credit balances

Back 4

uninvested funds held in client accounts that the dealer member may use as a financing source for its business
payable on dmeand to their cleints
statement required by IIROC and exchanges

Front 5

types of margin positions

Back 5

long margin- allows the investor to partially finance the purchase of securities by borrowing money from the dealer
short margin- allows investor to sell securities short by arranging for the dealer to borrow securities to cover the short position

Front 6

margin risks

Back 6

- margin increases risks, magnifies the outcome
- loan and interest must be paid, must pay interest when the security is imagined and must repay the loan at the end
- margin calls must be paid with out delay
- dealer can sell securities from the account to secure it loan without the client consent

Front 7

dangers of short selling

Back 7

- difficulties borrowing a sufficient quantity to cover the short sale
- adequate margin
- liable for dividends or other benefits paid
- buy in requirements
- difficult to obtain up to date information
- unlimited loss

Front 8

cross

Back 8

single dealer matches a a buy order and a sell order between two of its customers (vs two agents arranging for each of their customers)

Front 9

traditional agency transaction model

Back 9

two counter parties are customers of different dealers (agents)

Front 10

market order

Back 10

1. market order: an order to buy or sell a specific number of securities at the prevailing market price (not bearing a specific price) - paying the offer price or accepting the bid
2. limit order- buy or sell securities at a specific price or better
3. day order- expires if not executed on the day it was entered (all orders this unless specified)
4. (GTC)Good till cancelled- most firms will not allow these
6. AON all or none-
7. Any part order
8. good through order- good through a certain number of days
9. stop loss order- to sell a security when the price of one unit of the security delines to or falls below a certain amount- limits the loss or protecting a paper profit
10. stop buy order-
11. professional order- client order is always given priority

5.