Chapter 3. Participating in the Market. Buying and Selling in the Market. Full service brokers Examples Merrill Lynch Salmon Smith Barney Broker determines investors’ objective Conservative Preservation of capital Income Growth plus income Growth Risk versus (expected) return.
Participating in the Market
You purchase 100 shares at $60 per share and margin = 50%
Assume the stock rises to $80 per share.
Assume, instead, the stock drops to $40 per share.
You sold short 100 shares at $70 per share and margin is 50%
If the price of the stock increases to $80, what will be the new value of your equity position?
Example – a value-weighted index comprising of three firms A, B, and C the weighting is shown on the next slide
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NASDAQ-100 (the index itself)
Rising interest rates falling bond prices
Falling interest rates rising bond prices