How Securities are Traded (chapter 5). Brokerage Operations. Brokerage firms earn commissions on executed trades, sales loads on mutual funds, profits from securities sold from inventory, underwriting fees and administrative account fees
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“Buy 50 shares of Home Depot at market”
- Stop Loss order: Placing an order to sell when a stock falls to a specific price.
Brad Barber and Terrance Odean, 2002, “Online Investors: Do the Slow Die First?” Review of Financial Studies, 15, 455-487.
Know how brokers operate.
Know type of accounts
Orders on NYSE and Nasdaq
Discuss the market, limit and stop orders.
Discuss buying on margin; know how to calculate the change in the value of the margin account
Discuss the short selling; know how to calculate the short selling return
End of chapter questions 5.1 to 5.4; problems 5.1 to 5.4