By Charles R. Geisst (auth.)

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I),INC. IBR SBCVRITIES CORPORATION l'AZBNOVE INC. ITION NBW JAPAN SBI'VRITIBS INTERNATIONAL INC. SAN YO SBCURITIBS AMBRIC A INC. I TIONIL,/Nl'. Y. ALGBMBNB RANK NBIJBRLAND N. V. IT/ONALB IJE PARIS BANC,t llBLLA SVIZZBRA /TAU ANA RANQUB llB NBUFUZB. H SAL. & CIB. MORGAN GRBNFBLL & CO. A. HTU SAMUEl, & CO. IL Equity tombstone advertisement 26 A Guide to the Financial Markets primary market; that is, the market for new shares. Whether the discussion of primary market centres around shares or bonds it means, in all cases, the market away from the exchanges.

In addition, if the investor wishes to extend this leveraged period further, he may arrange a contango with a broker. By this method, the shares are carried over into a new account period; that is, they are sold in the old account and purchased for the same price in the new. Interest, or contango, is paid on the money involved. 12 Dealing of this nature can obviously affect the prices of shares, especially as an account period comes to a close. However, it is difficult to generalise about the effects of account dealing since the level of share prices will depend upon market conditions and expectation levels overall.

This is the technique of buying secuFities on credit, as extended by either the brokerage house or bank involved as agent in the transaction. Margin trading is quite common in the United States and to a lesser extent on the Continent but currently is not practised in Britain. This method allows the investor to gear up or leverage himself in order to buy shares, usually for a fraction of the purchase or selling price involved. One hundred shares of a stock selling at $50 could then be purchased (or sold short) for $2500 rather than $5000, assuming a margin requirement of 50 per cent.

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