Chapter 2 Flashcards
Buying and selling in anticipation of the overall direction of a market
Market Timing
The distribution of investment funds among broad classes of assets
Asset Allocation
Selection of specific securities within a particular class
Security Selection
Insurance fund covering investors’ brokerage accounts with member firms
Securities Investor Protection Corporation (SIPC)
A brokerage account in which all transactions are made on a strictly cash basis
Cash Account
A brokerage account in which, subject to limits, securities can be bought and sold on credit
Margin Account
The interest rate brokers pay to borrow bank funds for lending to customer margin accounts
Call Money Rate
The portion of the value of an investment that is not borrowed
Margin
The minimum margin that must be supplied on a securities purchase
Initial Margin
The minimum margin that must be present at all times in a margin account
Maintenance Margin
A demand for more funds that occurs when the margin in an account drops below the maintenance margin
Margin Call
Pledging securities as collateral against a loan
Hypothecation
An arrangement under which a broker is the registered owner of a security
Street Name
A sale in which the seller does not actually own the security that is sold
Short Sale
The amount of common stock held in short positions
Short Interest
