CSC Chapter 9: Equity Securities - Equity Transactions

settlement date

The date on which a securities buyer must pay for a purchase or a seller must deliver the securities sold.

cash account

A type of brokerage account where the investor is expected to have either cash in the account to cover their purchases or to deliver the required amount of cash before the settlement date of the purchase.

on-stop sell order

Also known as a stop loss order; an order that is triggered when a stock drops to the specified level.

limit order

A client’s order to buy or sell securities at a specific price or better. The order will only be executed if the market reaches or betters that price.

professional (PRO) order

A type of order for the account of partners, directors, officers, major shareholders, IAs and employees of member firms.

market order

An order placed to buy or sell a security immediately at the best current price.

margin call

The initial action a brokerage firm takes when changes in the values of an investor’s securities holdings or cash position results in the investor having insufficient margin in their margin account.

long position

What type of position does an investor have if they own securities?

on-stop buy order

An order to buy a stock at or above a certain price; used to protect a short position when the stock’s price is rising, or to ensure that a stock is purchased while its price is rising.

margin account

Account used to buy or sell securities on partial credit where the client pays only a portion of the purchase price and the investment dealer lends the balance to the client.

day order

A buy or sell order that automatically expires if it is not executed on the day it is entered.

confirmation

A printed acknowledgement, also called a contract, giving details of a purchase or sale of a security which is normally mailed to a client by the broker or investment dealer within 24 hours of an order being executed.

short position

A position created when an investor sells a security that he or she does not own.

good through order

An order to buy or sell that is good for a specified number of days and then is automatically cancelled if it has not been filled.

margin

The amount of money paid by a client when he or she uses credit to buy a security.

Margin Account Agreement Form

A contract that must be completed and signed by a client in order to open a margin account.