With the increase in trading by institutional investors, trading arrangements more suitable to these investors were developed. Institutional needs included trading in large size and trading groups of stocks, both at a low commission and with low market impact. This has resulted in the evolution of special arrangements for the execution of certain types of [...]
Common versus Preferred Stock
Officially, there are two kinds of stocks: common and preferred. A company initially sells common stock to investors who intend to make money by purchasing the shares at a lower price and selling them at a higher price. This profit is referred to as capital gains. However, if the company falters, the price of the [...]
Stocks
Those of you just starting in the field of investment have most likely heard about one popular financial instrument: the stock. In fact, thousands of stocks are traded on the U.S. stock exchanges every day. But what exactly is a stock? Basically, a stock is a unit of ownership in a company. The value of [...]
Margin Transactions
Investors can borrow cash to buy securities and use the securities them- selves as collateral. A transaction in which an investor borrows to buy shares using the shares themselves as collateral is called buying on mar- gin. By borrowing funds, an investor creates financial leverage. The funds borrowed to buy the additional stock will be [...]