Here is the second part of the investment terms that will
help you deal with your portfolio management.
Investment Mandate
This is a set of
guidelines, rules, and objectives implemented to manage a specific portfolio,
pool of capital, or a certain pile of funds. That person will then use a
specific strategy and work within certain risk parameters.
This is when you allocate a fund to an investment manager
for him or her to manage it in a particular way or a certain purpose. It also
refers to the formal appointment to advise on or arrange a project financing.
Margin
This is the difference between a product or service’s selling
price and its cost of production. It is also the ratio between a company’s
revenues and expenses.
This will come up the moment you open a brokerage account,
wherein you will need to specify whether
you want a cash account or a margin account. In investing, “to margin”
means to use borrowed money to purchase securities.
Registered
Investment Advisor
This is an advisor or firm involved in the investment advisory
business. It is registered on either the Securities Exchange Commission (SEC)
or state securities authorities.
An RIA can be engaged either directly or through
publications for different purposes. These purposes include: in the act of providing advice, for
compensation, furnishing analyses in securities, issuing reports, or making
recommendations.
Selling Short
This is also known as short selling.
Short selling takes place when you – as an investor or
speculator – borrow shares of stock or
other asset that you do not own. You then sell these borrowed shares, pockets
the money while promising to replace the property someday, in hopes of a decline in the price of the asset so
that it can be purchased in a lower cost, turning
the differential into profit.
If you end up doing this wrong, you can go bankrupt.
Stock Broker
This can be an institution or an individual. A stock broker executes buy or sell orders on behalf of a
customer. Also known as a registered representative, investment adviser or
simply, broker.
They will settle trades against their client’s custody
account. They will make sure that the transaction is done the right way, ensuring
that the cash gets to the right party and the security reaches the right party
by a certain deadline.
Stock Trades
There are at least twelve
different types of this. You can place a stock trade with a broker to buy
or sell ownership in companies which includes market orders, limit orders, and stop loss orders.
UTMA
This is an account made under the Uniform Transfers to
Minors Act in a particular state.
This will allow an
adult to buy property under his or her name for the benefit of a child. A minor
child then has to reach a certain age
set in the UTMA documentation with
21 years old being the maximum allowable age in most states. The adult
holding the property under his name is then known as the custodian and owes a
fiduciary duty to the child.
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