Trading & Brokerage Flashcards
Market Making
Profit by buying the securities and selling it to the clients and profit from the bid/ask spread
What’s a short-selling technique?
Borrow the shares from an investment bank and pay the commission and sell it in the market. Six months later, when it’s time to give the share back to the investment bank, you buy it from the market and give it to them
Financial Instruments traded by Investment Banks
Equity,
Bluechip stocks?
Well recognized, large and established companies
Who are investment grade companies?
Companies that received high ratings from the credit rating agencies
What’s the minimum market capitalization of a bluechip company?
5 Billion Dollars
What’s the capitalization of a mid cap stock
Between 2 and 5 Billion Dollars
What’s the capitalization of a small cap stock
Less than 2 Billion Dollars
Who are the typical investors in blue chip companies
Mutual and pension funds
What’s fixed income
Bonds issued by Government and Companies
Credit for country issuing bonds…
Credit rating agency track the credibility of government and macroeconomic and assign a rating
Who are the typical buyers of government bonds
Mutual funds, pension funds and insurance companies
What are considered the traditional asset classes?
Stocks and Bonds
What are derivative contracts?
Like Options, futures, forwards and swaps
