9) Trading and Brokerage Flashcards
what are the four major trading devisions
1) ForEx
2) Fixed income
3) equities
4) commodities
what are two main kinds of services offered by each division
1) market making brokerage (intermediary services)
2) proprietary positions (buy and hold, or short)
who are the essential clients for brokerage firms
asset managers, pension funds and hedge funds
why is the importance of brokerage firms decreasing
several platforms allow you commission free trading on your own
what is the time horizon for proprietary trading for banks
short term, banks are not in the business of buying and holding assets for extended periods of time
what are equities
shares of companies traded on stock exchange
what are the primary equities traded
blue chip stocks and other
what are blue chips
issues by well known companies with stable earnings
usually over 5bn market cap
“investment grade’
what are other stocks
mid cap (2 to 2.5 bn market cap) and small cap firm (less than 2 bn)
who invests in blue chip and why
mutual and pension funds seeking lower risk and good return
who invests in other stocks and why
insurance companies and retail investors higher risk and return
what is are fixed income securities
bonds
what are government bonds
bonds issued by goverenemt
who rates government bonds
rating agencies, s&p 500, Moodys etc
who buys government bonds
mutual funds, pension funds, insurance companies
