Cash Accounts- Any one can

open, Customer pays full for

securities Purchased

Margin Accounts- Allows customer

to borrow money for investing-

All Details of the customers are

2 3
collected according to except
customer signature(USA Patriot
Act 2001)
Corporate Accounts - must
Types of Accounts establish the following.
Account Creation
1)legal right to open account
2)if there are any limitations on
business or stakeholder or court
has placed on the securities in
which the busness can invest

Fee- based Accounts- better for

high trading activity

Prime Brokerage Accounts-

Through Margin accounts

investors can borrow money
Customer Purchase securities and
through Pledging Capital
Pay interest on the money
borrowed until loan is repaid
Long
1 (customer borrow money)

Stock is borrowed and sold short,

Types of Margin Accounts Short
Enabling the customer to profit if
(customer borrow securities) the value declines

Margin- Refers to Minimum 2

amount of cash or marginable Purchase more securities with a
securites a customer must deposit lower cash
To customers
Advantages
3 margin account generates interest
Regulation T states Customer
income
must deposit a minimum of 50%
of the market value within 5
business days 5 To brokers
Customers tend to trade large
4 positions, generating higher
Identifies Marginable Securities commisions
Regulation T Credit Agreement
that can be used as collateral
Customer Signs Margin
Agreement which has 3 parts Hypothecation agreement - gives
Exempt Securities power to broker/dealer to pledge
customer margin securities as
collateral.
Open Margin Account,
Loan Consent form- The firm can
Risk Disclosure Form loan the customer marginable
securities to other customers for
short sales

securities ct 1933- companies

issuing securities should provide
enough information
The Underwriter informs the
issuer best financing
mechanism(equity or Debt) based
on the tax considerations or
Issuer should fill the registration
Regulations statement and submit prospectus
Assists Issuer with registration
and distribution of the new
security
The syndicate manager takes
care of the agreement, decide the
The Responsibilities of an Forms underwriting syndicate with timing of offering. control
underwriter other underwriters for distribution advertising
1 of the shares

Filing the registration statement

New Issue with the SEC,

Filing the registration statement

The works of an issuers with the states in which it intends
to sell Securities(Blue Skying the
issue)
2
Issuing Securities The Underwriting Process
Negotiating the Securities price
and amount of spread with the
underwriter

Investors buy a share of can be traded multiple times

ownership in the company’s without direct involvement from
networth After the IPO, the company’s the company
Public Offering - sold to investing shares are listed in the Stock
public Exchange
Equity
Assets - Liabilitites =. Equity Types of Offering Company rcieved proceeds from
Private Placement - sold to IPO, subsequest trading in the
istitutional investors , generally secondary market doesnot affect
exempt from Securities Act 1933 the company’s Finance’s
Price Appreciation
ROI

Cash Dividends
Types of
Dividends Dividends

Stock Dividends

Brought to Market by Negotiated

Underwrting by Issuer and
Underwriter

Issued in Bullet form- Entire issue

has single mturity date

Bonds
interest rate high enough to
compete with other bonds , but interest rate with assistance of the
not high enough that company underwriter
can’t pay-
Default

The bond buyers buy the

reciever’s certificate
better that liquidation of assets

Income bonds Pay when earned basis,

extremeely risky high interest rate

SEC gives its bylaws, constituion OTC Pink- limited information Participating market makers can
and articles of incorporation
Non-NASDAQ set a paramenter below which it
automatically executes( example
OTC Bulletin Board market maker set a value of
Exchange should report any SOES 10000 long or short, anything let is
change in the rules automatically executed)
OTC NASDAQ/ Dealer market Market
some brokerage firms act a
makers make markets for the
The Regulation of trading ACES branch are not market making
securities he possesses based on Electronic Systems firms and they route their orders to
SEC-registered company should the price movements example:
the market making firms
file their 10k’s and 10Qs infromin virtu
the SEC their financial status CAES

2 Augments Inter market trading

system by bringing into the
IPO primary markets OTC Listed system OTC securities

3
Trading equity Security Markets Secondary Markets Overseeing the trading in the
Specialists assigned securties

Making markets - by buying and

NYSE selling the securities to maintain
NYSE and other exchanges interact near the trading posts for the supply and demand
auction

House Brokers

Brokers from members firm who

two dollar brokers assist house execute orders for their customers
brokers

Electronic communication
Fourth Market networks- available 24hours
DarkPools of liquidity. example If i
want to sell 200,000 shares out
of 500,000 share I have un-assisted by brokers

Voting Rights

Pre-emptive Rights

Rights of Common stock

ownership
Limited Liability

Inspection of Corporate books

Price Appreciation

Residual claims to assets

Cash Dividends The Stock Certificate
Types of
Dividends Dividends
Cusip Numbers
Stock Dividends
ROI Featured of Transferable
Securities
Negotiability
Transferability of Ownership

2
Equity
Preferred Stock Common Stock
Assets - Liabilitites =. Equity Transfer Agents

Transfer Procedures
Investors buy a share of
ownership in the company’s Registrar
networth

Straight Preferred The Dividend rate,

Cumulative(non Types of Common Stock
cumulative),Callable(not),converti
ble(), adjustable rate, reverse
Cumulative Preferred Types of Preferred Stock Authorize
floating rate, putable, self Treasury Issued Outstanding
liquidating d
Convertible Preferred

Participating Preferred
Company authorized to sell the no
Callable Preferred of stocks present in original
Stock the investor owned-
charter
Company has issued and not re
purchaese
Authorized and distributed to the
investors

Price Appreciation

Cash Dividends
Types of
Dividends Dividends

Stock Dividends
ROI

New Note

Equity
Assets - Liabilitites =. Equity

Investors buy a share of

ownership in the company’s
networth

New Note

New Note