Stocks+Quest+Lesson+3

Here you can view and download Stocks Quest Lesson 3; Selling short and Buying on the Margin. These are two very risky strategies to investing that can be very profitable but also can be very dangerours to the investor. Here are some basic definitions of these two terms.

Short Selling-
The selling of a security (stock) that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short. Here is a video that really does a nice job of explaining short selling Selling short is the opposite of going long. That is, short sellers make money if the stock goes down in price. This is an advanced trading strategy with many unique risks and pitfalls. Novice investors are advised to avoid short sales. media type="youtube" key="3wdg9__Oq9w" height="241" width="392"

Margin-
1. Borrowed money that is used to purchase securities. This practice is referred to as "buying on margin". 2. The amount of equity contributed by a customer as a percentage of the current market value of the securities held in a margin account. 3. In a general business context, the difference between a product's (or service's) selling price and the cost of production. 4. The portion of the interest rate on an adjustable-rate mortgage that is over and above the adjustment-index rate. This portion is retained as profit by the lender.

Margin Call-
A broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. Margin calls occur when a you account value depresses to a value calculated by the broker's particular formula. This is sometimes called a "fed call" or "maintenance call".

Here is a video to explain Margin Calls: media type="youtube" key="zYQCGgFMrEo" height="227" width="382"

You may click on the link below or you may view this lesson. Please remember this is a "double dip" assignment and is Due **__TBA__**

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