This one's about margin accounts, i.e. how much in the red for margin are you after adjusting for...stuff.
Your max borrow under Reg T is 50 percent, so if you have 100k in your brokerage account, which has been set up as a margin account, you can borrow up to 50k, but that's after adjustments.
So like...what adjustments? Well, things like interest charges and sometimes liquidity discounts, i.e. in thinly traded shares, if you wanted to just get out, you can't without dropping the price a ton.
So more adjustments often then come in from the broker imposing their own set of 'safety rails' on top of the Reg T margin structure.
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Finance: What is a red herring? (Plus Br...23 Views
finance a la shmoop what is a red herring?
hi I'm red, red-err-ing.. red herring I'm here to tell you about my role in high [Red herring swimming in the ocean]
finance I'm actually the co-star of an IPO, how so you asked well yes of
course you asked..what's that, what's my primary job well my primary job is to
distract that's kind of why I was put on earth here to distract people, fish and [Man on a ship]
birds from you know other things that's what the red in red herrings do and no
we're not communists although we all do like the same brand of plankton but
that's me the fish me the IPO mascot that's a lot more fun...
I'm the namesake of an investment marketing document I'm the papers that
get filed with the SEC that outline the details of a new offering an IPO....
A secondary placement of founder shares after a company has already been public
a while as well I'm also there for a bond offering, a proposed merger all of [List of what red herrings are used for]
them need me so why do I exist.... while the goal here is to give investors
time to really get to know the issue they may want to invest in I don't carry
all the details not specific pricing, no legally binding asks and just an outline
of what's being proposed but I'm like 98% done and by not being fully done
it's easy to amend and tweak and change this and that so that the really uptight [Red herring talking]
fisherman at the SEC don't get all hacked off if they you know end up
reeling something in that well they didn't want [Fisherman catches a shark]
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Reg T, or Regulation T, is a federal regulation that covers the form and manner in which brokers, or brokerages, can extend credit to customers.
What does a stockbroker do? Stockbrokers use money from investors to invest in the stock market. Their first job is to go out and find these client...
What is a registration statement? A registration statement is the set of documents that accompany a filing of securities with the SEC for sale in t...