FNCE30001 Chapter Notes - Chapter 8: Bid Price, Ask Price, Initial Public Offering
29 Jun 2020
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Retail brokers execute trades and keep track of portfolios. Market orders - execution at the current price. Limit orders - execution if the price is above or below a limit that the investor specifies. Stop-loss orders - sell if the security has lost a certain amount of money. Handle the execution of trades - route investors" orders to a centralised trading location. Keep track of investors" holdings, to facilitate purchasing on margin (borrowing money to purchase stock) and to facilitate selling securities "short" Many larger and institutional investors break the two functions apart. Used for speculation that a stock will go down. Find an investor in the market who is willing to lend the shares. Repurchase the shares and return them to the lender. An exchange is a centralised trading location where financial securities are traded. A market maker is a broker-dealer who agrees to continuously stand by to offer to buy or sell shares.
