•
Private Placement
How to Trade Investors must draw a proper track about how he will make his investments. There are few possible ways regarding this matter: • • •
Margin Trading Short Sale Own Investment
Margin Trading: Margin trading is a way to make investment in stocks or securities through the financial help of the broker. Here only a portion of the investment proceed comes from investors’ own money. The remaining portion is borrowed from a broker. Followings are some features of margin trading: Method: • •
Bet on a rise in the price of the security Higher leverage, magnifying upside & down side risks
Collateral: Stocks purchased on margin must be maintained with the broker as collateral for the loan Initial Margin: The percentage of stock value that must be maintained with the broker Maintenance Margin: Minimum amount of equity maintained in the account. Margin Call: Call from a broker to put up more equity funds when exceeds minimum balance. Margin arrangements differ for different securities. Margin control: The broker controls how much equity must be maintained by margin traders. The equation is: Equity = ( Total value of investment – Amount borrowed ) /Total Value of Investment