Chapter - 9 Flashcards
A type of brokerage account where the investor is expected to have either cash in the account to cover their purchases or where an investor will deliver the required amount of cash before the settlement date of the purchase.
cash account
A printed acknowledgement giving details of a purchase or sale of a security which is normally mailed to
a client by the broker or investment dealer within 24 hours of an order being executed. Also called a ___.
confirmation, contract
A buy or sell order that automatically expires if it is not executed on the day it is entered. All orders are ___ unless otherwise specified.
day order
An order to buy or sell that is open until either the order is filled, the client cancels the order, the order expires on a date specified by the client, or the order expires after 90 days. There are two types of ___: good til canceled and good til date.
good til order
A client’s order to buy or sell securities at a specific price or better. The order will only be executed if the market reaches or betters that price.
limit order
Signifies ownership of securities. “I am long 100 BCE common” means that the speaker owns 100 common shares of BCE Inc.
long position
The amount of money paid by a client when he or she uses credit to buy a security. It is the difference between the market value of a security and the amount loaned by an investment dealer.
margin
Account used to buy or sell securities on partial credit. In such cases, the client pays only a portion of the purchase price and the investment dealer lends the balance to the client. Short sales can only take place in a margin account.
margin account
A contract that must be completed and signed by a client and approved by the firm in order to open a margin account. This sets out the terms and conditions of the account.
Margin Account Agreement Form
When an investor purchases an account on margin in the expectation that the share value will rise, or
shorts a security on the expectation that share price will decline, and share prices go against the investor, the brokerage firm will send out a margin call requiring that the investor add additional funds or marketable securities to the account to protect the broker’s loan.
margin call
An order placed to buy or sell a security immediately at the best current price
market order
Also known as a ___, it is the opposite of an on-stop sell order – that is, an order to buy a stock at or above a certain price. On-stop buy orders are used to protect a short position when the stock’s price is rising, or to ensure that a stock is purchased while its price is rising.
on-stop buy order, stop buy order
Also known as a ___, it is an order that is specifically used in connection with a sell order where the limit price is below the existing market price. The order is triggered when the stock drops to the specified level. The purpose is to reduce the amount of loss that might be incurred or to protect at least part of a paper profit when a stock’s price declines.
on-stop sell order, stop loss order
A type of order for the account of partners, directors, officers, major shareholders, IAs and employees of member firms that must be marked “PRO”, “N-C” or “Emp”, in order to ensure that client orders are given priority for the same securities.
professional (PRO) order
The date on which a securities buyer must pay for a purchase or a seller must deliver the securities sold. For most securities, settlement must be made on or before the second business day following the transaction date.
settlement date
