🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeTextbook Notes300,000CA170,000

FIN 501 Chapter Notes - Chapter 3: Canada Deposit Insurance Corporation, Web Browser, Td Waterhouse

38 views8 pages
jademallard37
17 Jul 2012
School
Ryerson University
Department
Finance
Course
FIN 501
Professor
Edward Blinder

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Brokerage or trading accounts: open an account with a securities broker, such as scotia mcleod or td. Waterhouse if you have some money that you want to invest. You will be asked to supply some basic information about yourself and sign an agreement (often called a customer"s agreement) that spells out your rights and obligations and those of your broker. You then give your broker a cheque and instructions on how you want the money invested. Ex: you open an account and instruct your broker to purchase shares of a company"s stock and to retain any remaining funds in your account. Your broker will locate a seller and purchase the stock on you behalf. In addition, for providing this service, your broker will charge you a commission. Your broker will hold your stock for you or deliver the shares to you, whichever you wish. At a later date, you can sell your stock by instructing your broker to do so.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

FIN 501 Chapter Notes - Chapter 3: Call Money, Hypothecation, Jury Trial
beigefish258
FIN 501 Lecture Notes - Lecture 3: European Cooperation In Science And Technology, Market Timing, Pepsico
brownsquirrel142
FINE 3200 Lecture Notes - Lecture 2: Downside Risk, Nasdaq, Nyse Euronext
pearantelope799

Related Questions

Maintenance Margin

You are bearish on XYZ stock and decide to short 100 shares at the current market price of $50 per share.

How much in cash or securities must you have in your brokerage account if the broker

You decide to purchase on margin 1000 shares of ABC stock currently trading at $25 each. Your initial margin is 40% and your broker allows you a buffer of 10% before making a margin call – i.e., the maintenance margin is 30%.

(a) How much must you invest initially to purchase the shares and what is the amount you borrow from your broker?

(b) How far can share price fall before a margin call is triggered?

(c) Now assume that share price drops to $20. You received a margin call and you decided to deposit T-bills in your account to increase the margin; the deposit will increase the total value of your margin account while NOT changing the value of the loan. That is, the total value of your account will be the sum of the value of 1000 shares and the value of T-bills. What is the total value of T-bills you need to put up, in order to get the margin back up to the maintenance margin of 30%?

(d) If you do not take an action in time your broker will partly liquidate your position and repay the loan in order to (just) meet the maintenance margin requirement. How many shares would the broker sell in order to get the margin back up to the maintenance margin of 30%?

You decide to sell short 100 shares of Charlotte horse farms when it is selling at its yearly high of R56. Your broker tells you that your margin requirement is 45 percent and that the commission on the purchase is R155. While you are short the stock  Charlotte pays a R2.50 per share dividend. At the end of one year, you buy 100 shares of Charlotte at R45 to close out your position and are charged a commission of R145 and 8 percent interest on the money. what is your rate of return on the investment?