Lecture 21 - Security brokers and dealers and venture capital firms

Lecture 21 - Security brokers and dealers and venture capital firms

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Financial Markets and Institutions Security Brokers and Dealers And Venture Capital Firms Mishkin & Eakins Ch. 23 pp. 600-610
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Overview Intermediaries in secondary markets Brokerage services Securities dealers Venture capital firms
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Brokers Order Investor Broker Commission Market Maker or Floor or Other Floor Shares Broker Broker Cash Brokers are agents who act as intermediaries for investors in the purchase or sale of securities
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Brokerage services Three types of securities orders Market orders : order immediate transaction (purchase/sell) at current market price Limit orders : you specify a minimum / maximum price for sell / purchase. Order is reported until asset price matches. Short sells : Today: borrow securities and sell them Tomorrow: buy securities on market and repay your loan Buyers expect a price increase Short-sellers expect a price decrease
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Securities orders: examples
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Expects a decrease in price: short selling ; example. Time Price Borrow stocks 100 99 Sell stocks Buy stocks Return borrowed stocks Transactions with your broker Transactions in the market Gain = $1 per share - fees
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Other services Securities storage. Insured against loss. Margin credit
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Lecture 21 - Security brokers and dealers and venture capital firms

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