{"id":389,"date":"2018-11-28T19:28:15","date_gmt":"2018-11-28T19:28:15","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/?post_type=chapter&#038;p=389"},"modified":"2018-11-28T19:28:15","modified_gmt":"2018-11-28T19:28:15","slug":"14-2-investing-and-trading","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/chapter\/14-2-investing-and-trading\/","title":{"raw":"14.2 Investing and Trading","rendered":"14.2 Investing and Trading"},"content":{"raw":"<div id=\"navbar-top\" class=\"navbar\">\r\n<div class=\"navbar-part left\"><\/div>\r\n<\/div>\r\n<div id=\"book-content\">\r\n<div id=\"fwk-134226-ch14_s02\" class=\"section\" xml:lang=\"en\">\r\n<div id=\"fwk-134226-ch14_s02_n01\" class=\"learning_objectives editable block\">\r\n<div class=\"textbox learning-objectives\">\r\n<h3>Learning Objectives<\/h3>\r\n<ol id=\"fwk-134226-ch14_s02_l01\" class=\"orderedlist\">\r\n \t<li>Identify the important differences between types of investment agents.<\/li>\r\n \t<li>Describe the different levels of service offered by investment agents.<\/li>\r\n \t<li>Analyze the different fee and account structures available to investors.<\/li>\r\n \t<li>Differentiate the types of trading orders and explain their roles in an investment strategy.<\/li>\r\n<\/ol>\r\n<\/div>\r\n&nbsp;\r\n\r\n<\/div>\r\n<p id=\"fwk-134226-ch14_s02_p01\" class=\"para editable block\">The discussion of investment so far has focused on the ideas behind your investment plan, but to be useful to you, your plan has to be implemented. You have to invest, and then, over time, trade. How do you access the capital markets? How and when do you buy, sell, or hold?<\/p>\r\n<p id=\"fwk-134226-ch14_s02_p02\" class=\"para editable block\">To answer these questions you need to know the types of agents who exercise trades in the financial markets; the types of services, accounts, and fees they offer; and the kinds of trading orders they execute on your behalf.<\/p>\r\n\r\n<div id=\"fwk-134226-ch14_s02_s01\" class=\"section\">\r\n<h2 class=\"title editable block\">Agents: Brokers and Dealers<\/h2>\r\n<p id=\"fwk-134226-ch14_s02_s01_p01\" class=\"para editable block\">The markets or exchanges for stocks, bonds, commodities, or funds are membership organizations. Unless you are a member of the exchange, you cannot trade on the exchange without hiring an agent to execute trades for you. Trading essentially is buying and selling.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s01_p02\" class=\"para editable block\">As you\u2019ve read in <a class=\"xref\" href=\"fwk-134226-ch12#fwk-134226-ch12\">Chapter 12 \"Investing\"<\/a>, a <strong>broker<\/strong>[footnote]An intermediary that acts as an agent for buyers or sellers to arrange a trade.[\/footnote] is an agent who trades on behalf of clients to fulfill client directives. A <strong>dealer<\/strong> [footnote]A professional investor trading for its own account.[\/footnote] is a firm that is trading for its own account. Many firms act as <strong>broker-dealers<\/strong>[footnote]An intermediary that acts as an agent for buyers or sellers and also trades for its own account.[\/footnote], trading on behalf of both clients and the firm\u2019s account. Many brokers, dealers, and broker-dealers are independent firms, but many are subsidiaries or operations of large investment banks, commercial banks, or investment companies.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s01_p03\" class=\"para editable block\">Firms may offer different levels of brokerage services:<\/p>\r\n\r\n<ul id=\"fwk-134226-ch14_s02_s01_l01\" class=\"itemizedlist editable block\">\r\n \t<li><strong>Discretionary trading<\/strong>[footnote]An investor-broker relationship where the broker is empowered to make investment decisions and trades on behalf of the client.[\/footnote] means that the broker is empowered to make investment decisions and trades on behalf of the client.<\/li>\r\n \t<li><strong>Advisory dealing<\/strong>[footnote]An investor-broker relationship where the broker provides advice and guidance to the client, but investment decisions remain the client\u2019s.[\/footnote] means that the broker provides advice and guidance to the client, but investment decisions remain with the client.<\/li>\r\n \t<li><strong>Execution-only<\/strong>[footnote]An investor-broker relationship where the broker\u2019s only role is to execute trades per the investor\u2019s decisions.[\/footnote] service means that the broker\u2019s only role is to execute trades per the investor\u2019s decisions.<\/li>\r\n<\/ul>\r\n<p id=\"fwk-134226-ch14_s02_s01_p04\" class=\"para editable block\">Almost all brokerages provide online and mobile access, and most allow you to access your account information, including trading history, and to place orders and receive order confirmations online. Some discount brokers operate only online, that is, they have no retail or storefront offices at all. This allows them to lower costs and fees. Most brokerages still send out hard copies of such information as well. Some also provide research reports and tools such as calculators and data for making asset allocation decisions.<\/p>\r\n\r\n<\/div>\r\n<div id=\"fwk-134226-ch14_s02_s02\" class=\"section\">\r\n<h2 class=\"title editable block\">Fees<\/h2>\r\n<p id=\"fwk-134226-ch14_s02_s02_p01\" class=\"para editable block\">As firms offer different levels of service, their compensation or fee structures may vary. A broker is compensated for executing a trade by receiving a commission based on the volume of the security traded and its price. A discount broker may offer lower commissions on trades but may provide execution-only services.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s02_p02\" class=\"para editable block\">A firm may offer all levels of service or specialize in just one. Large discount brokers such as Fidelity, Scottrade, or Charles Schwab may provide a full range of services along with execution-only services that charge lower commissions on trades. Other discount brokers and online-only brokers may charge a lower flat fee per trade, rather than a commission on the amount of the trade. Some firms charge a commission on trades and a fee for advisory or discretionary services. The fee is usually a percentage of the value of the portfolio. Some charge a flat fee for a quarterly or annual portfolio check-up and advisory services.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s02_p03\" class=\"para editable block\">Both the commission-based and the fee-based compensation structures have critics. The commission-based structure results in more compensation for the broker (and more cost for you) if there are a greater number of trades. This can lead some brokers to engage in excessive trading, called <strong>churning<\/strong>[footnote]A broker practice of executing trades for a client\u2019s account solely to create commissions for the broker.[\/footnote]\u2014an unwarranted and unnecessary amount of trading in your account for which the broker is being compensated.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s02_p04\" class=\"para editable block\">On the other hand, a fee structure based on a percentage of the value of the assets under management can reward a broker for doing nothing. If the economy expands and asset values rise, the value of the portfolio\u2014and therefore the broker\u2019s compensation\u2014may rise without any effort on the broker\u2019s part.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s02_p05\" class=\"para editable block\">The most economical recourse for an investor is to find a broker who charges a flat fee for advisory services, independent of portfolio size, and discount fees for commissions on trading. The costs of investing and trading depend on how much trading you do and how involved you are in the investment decisions. The more of the research and advisory work you do for yourself, the less your costs should be.<\/p>\r\n\r\n<\/div>\r\n<div id=\"fwk-134226-ch14_s02_s03\" class=\"section\">\r\n<h2 class=\"title editable block\">Brokerage Accounts<\/h2>\r\n<p id=\"fwk-134226-ch14_s02_s03_p01\" class=\"para editable block\">Two basic types of brokerage accounts are cash accounts or margin accounts. With a <strong>cash account<\/strong>[footnote]A brokerage account where investments are paid for from money on deposit.[\/footnote], you can trade using only the cash you deposit into the account directly or as a result of previous trades, dividends, or interest payments. The cash account is the most common kind of brokerage account.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s03_p02\" class=\"para editable block\">With a\r\n<strong>margin account<\/strong>[footnote]A brokerage account allowing the investor to purchase securities with funds borrowed from the broker.[\/footnote], you may trade in amounts exceeding the cash available in the account, in effect borrowing from your broker to complete the financing of the trade. The investor is said to be \u201ctrading on margin.\u201d The broker usually requires a minimum value for a margin account and extends credit based on the value of the cash and securities in the portfolio. If your portfolio value drops below the minimum-value threshold, perhaps because securities values have dropped, then you may be faced with a <strong>margin call<\/strong>[footnote]The requirement that an investor invest more capital to maintain the margin requirement, or the investor\u2019s equity in the investment.[\/footnote]. The broker calls on you to deposit more into the account.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s03_p03\" class=\"para editable block\">Investors pay interest on funds borrowed on margin. As regulated by the Federal Reserve, the amount of an investment financed by debt or bought on margin is limited. The <strong>margin requirement<\/strong>[footnote]The percentage of security value that must represent capital from the investor (as opposed to money borrowed from the broker).[\/footnote] is the percentage of the investment\u2019s value that must be paid for in cash.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s03_p04\" class=\"para editable block\"><strong>Custodial accounts<\/strong>[footnote]A brokerage account for a minor, established with a guardian (adult) who is authorized to make trading decisions.[\/footnote] are accounts created for minors under the federal Uniform Gifts to Minors Act (UGMA) of 1956 or the Uniform Transfers to Minors Act (UTMA) of 1986. The account is legally owned by the minor and is in his or her name, but an adult custodian must be named for the account. Otherwise, the owner of a brokerage account must be a legal adult. The account is created at a bank, brokerage firm, or mutual fund company and is managed by an adult for an underage child (as defined by the state).<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s03_p05\" class=\"para editable block\">Establishing a brokerage account is as easy as opening a bank account or credit card account. You will need a good credit rating, especially for a margin account, a reasonable source of income, and a minimum deposit of assets. Many brokers allow you to transfer assets from another brokerage account with minimal effort.<\/p>\r\n\r\n<\/div>\r\n<div id=\"fwk-134226-ch14_s02_s04\" class=\"section\">\r\n<h2 class=\"title editable block\">Brokerage Orders<\/h2>\r\n<p id=\"fwk-134226-ch14_s02_s04_p01\" class=\"para editable block\">You need not be an expert in the arcane language brokers use to describe trades, so long as you understand the basic types of orders you can request. Say you want to buy a hundred shares of X Corporation\u2019s common stock. You call your broker and ask the price. The broker says that at this moment, the market is \u201c50 bid-50.25 ask.\u201d Stock exchanges are auction markets; that is, buyers bid what they are willing to pay and sellers ask what they\u2019re willing to accept. If the market is \u201c50 bid-50.25 ask,\u201d this means that right now the consensus among buyers is that they are willing to pay $50 per share, while sellers are willing to accept $50.25. The \u201cbid-ask spread\u201d or difference is 25 cents.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s04_p02\" class=\"para editable block\">If you then place a <strong>market order<\/strong>[footnote]An order to trade at the market price.[\/footnote] to buy a hundred shares, the order will be executed at the lowest asking price\u2014the least that the seller is willing to accept. In other words, you will pay $50.25 per share, the asking price, to buy the stock.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s04_p03\" class=\"para editable block\">You could also place a <strong>limit order<\/strong>[footnote]A trading order to buy or sell a security at a specific price.[\/footnotes] to buy the shares when the price is lower, say $45 per share (or to sell when the price is higher, say $55), specifying how long the order is in effect. If the price goes down to $45 (or up to $55) within the period of time, then your limit order will be filled, and otherwise it will not.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s04_p04\" class=\"para editable block\">When you buy a security, you are said to have a <strong>long position<\/strong>[footnote]Ownership of securities; used in the strategy of \u201cgoing long,\u201d which involves buying a security so that if the price rises, its sale will create a gain.[\/footnote] in that security; you own it. You could close out your position by selling it. When you \u201cgo long\u201d in a security, you are expecting its value to rise, so that you can buy it for a lower price and then sell it for a higher price.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s04_p05\" class=\"para editable block\">Alternatively, you could create a <strong>short position<\/strong>[footnote]Owing securities because of having borrowed them from a broker; used in the strategy of \u201cshorting,\u201d which involves borrowing and selling a security so that if the price falls, you can create a gain when the securities are repurchased to be returned.[\/footnote] in the security by borrowing it from your broker, selling it, and then buying it back and returning it to your broker at some specified point in the future. When you \u201cshort\u201d a security, you are expecting its value to decrease, so that you can sell it at a high price and then buy it back at a lower price.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s04_p06\" class=\"para editable block\">Other specialized kinds of orders include a <strong>stop-loss order<\/strong>[footnote]An order to sell a security once its price has fallen below a specified price.[\/footnote], where you direct that the stock be sold when it reaches a certain price (below the current price) in order to limit your potential loss if the value decreases. You can use a <strong>stop-buy order<\/strong>[footnote]An order to buy a security once its price has risen above a specified price.[\/footnote] to buy a stock at a certain price (above the current price) if you have \u201cshorted\u201d a security and want to limit your loss if its value rises.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s04_p07\" class=\"para editable block\">If you are following a \u201cbuy-and-hold\u201d strategy, you are establishing positions that you plan to hold for a long time. With this strategy you probably will do well to use a market order. Over the long term that you hold your position, the daily fluctuations in price won\u2019t matter.<\/p>\r\n\r\n<div id=\"fwk-134226-ch14_s02_s04_n01\" class=\"key_takeaways editable block\">\r\n<div class=\"textbox key-takeaways\">\r\n<h3 class=\"title\">Key Takeaways<\/h3>\r\n<ul id=\"fwk-134226-ch14_s02_s04_l01\" class=\"itemizedlist\">\r\n \t<li>A broker trades on behalf of clients; a dealer trades for its own account, and a broker-dealer does both.<\/li>\r\n \t<li>Brokers, dealers, and broker-dealers may be independent firms or subsidiaries of investment banks, commercial banks, or investment companies.<\/li>\r\n \t<li>\r\n<p class=\"para\">Firms may offer several levels of brokerage services, defining their roles as active manager, advisor, and\/or traders:<\/p>\r\n\r\n<ul id=\"fwk-134226-ch14_s02_s04_l02\" class=\"itemizedlist\">\r\n \t<li>discretionary trading,<\/li>\r\n \t<li>advisory dealing,<\/li>\r\n \t<li>execution only.<\/li>\r\n<\/ul>\r\n<\/li>\r\n \t<li>\r\n<p class=\"para\">Brokerage fees are based on the level of service provided and may consist of<\/p>\r\n\r\n<ul id=\"fwk-134226-ch14_s02_s04_l03\" class=\"itemizedlist\">\r\n \t<li>commissions on trading,<\/li>\r\n \t<li>advisory fees based on portfolio value, or<\/li>\r\n \t<li>a flat fee for management.<\/li>\r\n<\/ul>\r\n<\/li>\r\n \t<li>\r\n<p class=\"para\">Brokerage accounts may be<\/p>\r\n\r\n<ul id=\"fwk-134226-ch14_s02_s04_l04\" class=\"itemizedlist\">\r\n \t<li>cash accounts,<\/li>\r\n \t<li>margin accounts, or<\/li>\r\n \t<li>custodial accounts.<\/li>\r\n<\/ul>\r\n<\/li>\r\n \t<li>\r\n<p class=\"para\">Trading orders allow you to better execute a specific trading strategy:<\/p>\r\n\r\n<ul id=\"fwk-134226-ch14_s02_s04_l05\" class=\"itemizedlist\">\r\n \t<li>market orders,<\/li>\r\n \t<li>limit orders,<\/li>\r\n \t<li>stop-loss orders, or<\/li>\r\n \t<li>stop-buy orders.<\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ul>\r\n<\/div>\r\n<\/div>\r\n<div id=\"fwk-134226-ch14_s02_s04_n02\" class=\"exercises editable block\">\r\n<h3 class=\"title\">Exercises<\/h3>\r\n<ol id=\"fwk-134226-ch14_s02_s04_l06\" class=\"orderedlist\">\r\n \t<li>Read the information at the following sites about choosing an investment broker or brokerage firm: <a class=\"link\" href=\"http:\/\/beginnersinvest.about.com\/od\/choosingabroker\/a\/brokeraccount.htm\" target=\"_blank\" rel=\"noopener\">http:\/\/beginnersinvest.about.com\/od\/choosingabroker\/a\/brokeraccount.htm<\/a> and <a class=\"link\" href=\"http:\/\/www.msmoney.com\/mm\/investing\/inv_experts\/brokerage_firms.htm\" target=\"_blank\" rel=\"noopener\">http:\/\/www.msmoney.com\/mm\/investing\/inv_experts\/brokerage_firms.htm<\/a>. In My Notes or your personal finance journal, record the top ten questions about a broker or brokerage that will guide your choice. What answers will you be looking for? See how the investment industry evaluates brokers at <a class=\"link\" href=\"http:\/\/www.smartmoney.com\/investing\/economy\/smartmoneys-annual-broker-survey-23119\" target=\"_blank\" rel=\"noopener\">http:\/\/www.smartmoney.com\/investing\/economy\/smartmoneys-annual-broker-survey-23119<\/a> and <a class=\"link\" href=\"http:\/\/www.moneybluebook.com\/reviews-of-the-best-online-discount-brokers\" target=\"_blank\" rel=\"noopener\">http:\/\/www.moneybluebook.com\/reviews-of-the-best-online-discount-brokers<\/a>.<\/li>\r\n \t<li>What information (or inspiration) useful for personal finance can you get at Money Blue Book (<a class=\"link\" href=\"http:\/\/www.moneybluebook.com\" target=\"_blank\" rel=\"noopener\">http:\/\/www.moneybluebook.com<\/a>)? How would you evaluate the Money Blue Book Web site as a source of financial news, information, and advice? In your opinion, how do sites such as Money Chimp (<a class=\"link\" href=\"http:\/\/www.moneychimp.com\/\" target=\"_blank\" rel=\"noopener\">http:\/\/www.moneychimp.com\/<\/a>), Cool Investing (<a class=\"link\" href=\"http:\/\/www.coolinvesting.com\/\" target=\"_blank\" rel=\"noopener\">http:\/\/www.coolinvesting.com\/<\/a>), and Get Rich Slowly (<a class=\"link\" href=\"http:\/\/www.getrichslowly.org\/blog\/\" target=\"_blank\" rel=\"noopener\">http:\/\/www.getrichslowly.org\/blog\/<\/a>) compare?<\/li>\r\n \t<li>\r\n<p class=\"para\">At the following Web sites, survey the argots, or \u201csecret\u201d vocabularies, that brokers use to discuss trades. From each glossary select five words relevant to you and their definitions to record in your personal finance journal or My Notes.<\/p>\r\n\r\n<ul class=\"itemizedlist\">\r\n \t<li style=\"list-style-type: none\">\r\n<ul class=\"itemizedlist\">\r\n \t<li>Stock Trading: <a class=\"link\" href=\"http:\/\/www.mytradingsystem.net\/Glossary-trading-terms.html\" target=\"_blank\" rel=\"noopener\">http:\/\/www.mytradingsystem.net\/Glossary-trading-terms.html<\/a><\/li>\r\n \t<li>Bond Trading: <a class=\"link\" href=\"http:\/\/www.bondsonline.com\/asp\/trading\/glossary.asp\" target=\"_blank\" rel=\"noopener\">http:\/\/www.bondsonline.com\/asp\/trading\/glossary.asp<\/a><\/li>\r\n \t<li>Futures Trading: <a class=\"link\" href=\"http:\/\/www.webtrading.com\/glossary.htm\" target=\"_blank\" rel=\"noopener\">http:\/\/www.webtrading.com\/glossary.htm<\/a><\/li>\r\n \t<li>Currency Trading (Foreign Exchange, or FOREX): <a class=\"link\" href=\"http:\/\/www.fxwords.com\" target=\"_blank\" rel=\"noopener\">http:\/\/www.fxwords.com<\/a><\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ul>\r\n<\/li>\r\n<\/ol>\r\n<\/div>\r\n<\/div>\r\n<\/div>\r\n<\/div>","rendered":"<div id=\"navbar-top\" class=\"navbar\">\n<div class=\"navbar-part left\"><\/div>\n<\/div>\n<div id=\"book-content\">\n<div id=\"fwk-134226-ch14_s02\" class=\"section\" xml:lang=\"en\">\n<div id=\"fwk-134226-ch14_s02_n01\" class=\"learning_objectives editable block\">\n<div class=\"textbox learning-objectives\">\n<h3>Learning Objectives<\/h3>\n<ol id=\"fwk-134226-ch14_s02_l01\" class=\"orderedlist\">\n<li>Identify the important differences between types of investment agents.<\/li>\n<li>Describe the different levels of service offered by investment agents.<\/li>\n<li>Analyze the different fee and account structures available to investors.<\/li>\n<li>Differentiate the types of trading orders and explain their roles in an investment strategy.<\/li>\n<\/ol>\n<\/div>\n<p>&nbsp;<\/p>\n<\/div>\n<p id=\"fwk-134226-ch14_s02_p01\" class=\"para editable block\">The discussion of investment so far has focused on the ideas behind your investment plan, but to be useful to you, your plan has to be implemented. You have to invest, and then, over time, trade. How do you access the capital markets? How and when do you buy, sell, or hold?<\/p>\n<p id=\"fwk-134226-ch14_s02_p02\" class=\"para editable block\">To answer these questions you need to know the types of agents who exercise trades in the financial markets; the types of services, accounts, and fees they offer; and the kinds of trading orders they execute on your behalf.<\/p>\n<div id=\"fwk-134226-ch14_s02_s01\" class=\"section\">\n<h2 class=\"title editable block\">Agents: Brokers and Dealers<\/h2>\n<p id=\"fwk-134226-ch14_s02_s01_p01\" class=\"para editable block\">The markets or exchanges for stocks, bonds, commodities, or funds are membership organizations. Unless you are a member of the exchange, you cannot trade on the exchange without hiring an agent to execute trades for you. Trading essentially is buying and selling.<\/p>\n<p id=\"fwk-134226-ch14_s02_s01_p02\" class=\"para editable block\">As you\u2019ve read in <a class=\"xref\" href=\"fwk-134226-ch12#fwk-134226-ch12\">Chapter 12 &#8220;Investing&#8221;<\/a>, a <strong>broker<\/strong><a class=\"footnote\" title=\"An intermediary that acts as an agent for buyers or sellers to arrange a trade.\" id=\"return-footnote-389-1\" href=\"#footnote-389-1\" aria-label=\"Footnote 1\"><sup class=\"footnote\">[1]<\/sup><\/a> is an agent who trades on behalf of clients to fulfill client directives. A <strong>dealer<\/strong> <a class=\"footnote\" title=\"A professional investor trading for its own account.\" id=\"return-footnote-389-2\" href=\"#footnote-389-2\" aria-label=\"Footnote 2\"><sup class=\"footnote\">[2]<\/sup><\/a> is a firm that is trading for its own account. Many firms act as <strong>broker-dealers<\/strong><a class=\"footnote\" title=\"An intermediary that acts as an agent for buyers or sellers and also trades for its own account.\" id=\"return-footnote-389-3\" href=\"#footnote-389-3\" aria-label=\"Footnote 3\"><sup class=\"footnote\">[3]<\/sup><\/a>, trading on behalf of both clients and the firm\u2019s account. Many brokers, dealers, and broker-dealers are independent firms, but many are subsidiaries or operations of large investment banks, commercial banks, or investment companies.<\/p>\n<p id=\"fwk-134226-ch14_s02_s01_p03\" class=\"para editable block\">Firms may offer different levels of brokerage services:<\/p>\n<ul id=\"fwk-134226-ch14_s02_s01_l01\" class=\"itemizedlist editable block\">\n<li><strong>Discretionary trading<\/strong><a class=\"footnote\" title=\"An investor-broker relationship where the broker is empowered to make investment decisions and trades on behalf of the client.\" id=\"return-footnote-389-4\" href=\"#footnote-389-4\" aria-label=\"Footnote 4\"><sup class=\"footnote\">[4]<\/sup><\/a> means that the broker is empowered to make investment decisions and trades on behalf of the client.<\/li>\n<li><strong>Advisory dealing<\/strong><a class=\"footnote\" title=\"An investor-broker relationship where the broker provides advice and guidance to the client, but investment decisions remain the client\u2019s.\" id=\"return-footnote-389-5\" href=\"#footnote-389-5\" aria-label=\"Footnote 5\"><sup class=\"footnote\">[5]<\/sup><\/a> means that the broker provides advice and guidance to the client, but investment decisions remain with the client.<\/li>\n<li><strong>Execution-only<\/strong><a class=\"footnote\" title=\"An investor-broker relationship where the broker\u2019s only role is to execute trades per the investor\u2019s decisions.\" id=\"return-footnote-389-6\" href=\"#footnote-389-6\" aria-label=\"Footnote 6\"><sup class=\"footnote\">[6]<\/sup><\/a> service means that the broker\u2019s only role is to execute trades per the investor\u2019s decisions.<\/li>\n<\/ul>\n<p id=\"fwk-134226-ch14_s02_s01_p04\" class=\"para editable block\">Almost all brokerages provide online and mobile access, and most allow you to access your account information, including trading history, and to place orders and receive order confirmations online. Some discount brokers operate only online, that is, they have no retail or storefront offices at all. This allows them to lower costs and fees. Most brokerages still send out hard copies of such information as well. Some also provide research reports and tools such as calculators and data for making asset allocation decisions.<\/p>\n<\/div>\n<div id=\"fwk-134226-ch14_s02_s02\" class=\"section\">\n<h2 class=\"title editable block\">Fees<\/h2>\n<p id=\"fwk-134226-ch14_s02_s02_p01\" class=\"para editable block\">As firms offer different levels of service, their compensation or fee structures may vary. A broker is compensated for executing a trade by receiving a commission based on the volume of the security traded and its price. A discount broker may offer lower commissions on trades but may provide execution-only services.<\/p>\n<p id=\"fwk-134226-ch14_s02_s02_p02\" class=\"para editable block\">A firm may offer all levels of service or specialize in just one. Large discount brokers such as Fidelity, Scottrade, or Charles Schwab may provide a full range of services along with execution-only services that charge lower commissions on trades. Other discount brokers and online-only brokers may charge a lower flat fee per trade, rather than a commission on the amount of the trade. Some firms charge a commission on trades and a fee for advisory or discretionary services. The fee is usually a percentage of the value of the portfolio. Some charge a flat fee for a quarterly or annual portfolio check-up and advisory services.<\/p>\n<p id=\"fwk-134226-ch14_s02_s02_p03\" class=\"para editable block\">Both the commission-based and the fee-based compensation structures have critics. The commission-based structure results in more compensation for the broker (and more cost for you) if there are a greater number of trades. This can lead some brokers to engage in excessive trading, called <strong>churning<\/strong><a class=\"footnote\" title=\"A broker practice of executing trades for a client\u2019s account solely to create commissions for the broker.\" id=\"return-footnote-389-7\" href=\"#footnote-389-7\" aria-label=\"Footnote 7\"><sup class=\"footnote\">[7]<\/sup><\/a>\u2014an unwarranted and unnecessary amount of trading in your account for which the broker is being compensated.<\/p>\n<p id=\"fwk-134226-ch14_s02_s02_p04\" class=\"para editable block\">On the other hand, a fee structure based on a percentage of the value of the assets under management can reward a broker for doing nothing. If the economy expands and asset values rise, the value of the portfolio\u2014and therefore the broker\u2019s compensation\u2014may rise without any effort on the broker\u2019s part.<\/p>\n<p id=\"fwk-134226-ch14_s02_s02_p05\" class=\"para editable block\">The most economical recourse for an investor is to find a broker who charges a flat fee for advisory services, independent of portfolio size, and discount fees for commissions on trading. The costs of investing and trading depend on how much trading you do and how involved you are in the investment decisions. The more of the research and advisory work you do for yourself, the less your costs should be.<\/p>\n<\/div>\n<div id=\"fwk-134226-ch14_s02_s03\" class=\"section\">\n<h2 class=\"title editable block\">Brokerage Accounts<\/h2>\n<p id=\"fwk-134226-ch14_s02_s03_p01\" class=\"para editable block\">Two basic types of brokerage accounts are cash accounts or margin accounts. With a <strong>cash account<\/strong><a class=\"footnote\" title=\"A brokerage account where investments are paid for from money on deposit.\" id=\"return-footnote-389-8\" href=\"#footnote-389-8\" aria-label=\"Footnote 8\"><sup class=\"footnote\">[8]<\/sup><\/a>, you can trade using only the cash you deposit into the account directly or as a result of previous trades, dividends, or interest payments. The cash account is the most common kind of brokerage account.<\/p>\n<p id=\"fwk-134226-ch14_s02_s03_p02\" class=\"para editable block\">With a<br \/>\n<strong>margin account<\/strong><a class=\"footnote\" title=\"A brokerage account allowing the investor to purchase securities with funds borrowed from the broker.\" id=\"return-footnote-389-9\" href=\"#footnote-389-9\" aria-label=\"Footnote 9\"><sup class=\"footnote\">[9]<\/sup><\/a>, you may trade in amounts exceeding the cash available in the account, in effect borrowing from your broker to complete the financing of the trade. The investor is said to be \u201ctrading on margin.\u201d The broker usually requires a minimum value for a margin account and extends credit based on the value of the cash and securities in the portfolio. If your portfolio value drops below the minimum-value threshold, perhaps because securities values have dropped, then you may be faced with a <strong>margin call<\/strong><a class=\"footnote\" title=\"The requirement that an investor invest more capital to maintain the margin requirement, or the investor\u2019s equity in the investment.\" id=\"return-footnote-389-10\" href=\"#footnote-389-10\" aria-label=\"Footnote 10\"><sup class=\"footnote\">[10]<\/sup><\/a>. The broker calls on you to deposit more into the account.<\/p>\n<p id=\"fwk-134226-ch14_s02_s03_p03\" class=\"para editable block\">Investors pay interest on funds borrowed on margin. As regulated by the Federal Reserve, the amount of an investment financed by debt or bought on margin is limited. The <strong>margin requirement<\/strong><a class=\"footnote\" title=\"The percentage of security value that must represent capital from the investor (as opposed to money borrowed from the broker).\" id=\"return-footnote-389-11\" href=\"#footnote-389-11\" aria-label=\"Footnote 11\"><sup class=\"footnote\">[11]<\/sup><\/a> is the percentage of the investment\u2019s value that must be paid for in cash.<\/p>\n<p id=\"fwk-134226-ch14_s02_s03_p04\" class=\"para editable block\"><strong>Custodial accounts<\/strong><a class=\"footnote\" title=\"A brokerage account for a minor, established with a guardian (adult) who is authorized to make trading decisions.\" id=\"return-footnote-389-12\" href=\"#footnote-389-12\" aria-label=\"Footnote 12\"><sup class=\"footnote\">[12]<\/sup><\/a> are accounts created for minors under the federal Uniform Gifts to Minors Act (UGMA) of 1956 or the Uniform Transfers to Minors Act (UTMA) of 1986. The account is legally owned by the minor and is in his or her name, but an adult custodian must be named for the account. Otherwise, the owner of a brokerage account must be a legal adult. The account is created at a bank, brokerage firm, or mutual fund company and is managed by an adult for an underage child (as defined by the state).<\/p>\n<p id=\"fwk-134226-ch14_s02_s03_p05\" class=\"para editable block\">Establishing a brokerage account is as easy as opening a bank account or credit card account. You will need a good credit rating, especially for a margin account, a reasonable source of income, and a minimum deposit of assets. Many brokers allow you to transfer assets from another brokerage account with minimal effort.<\/p>\n<\/div>\n<div id=\"fwk-134226-ch14_s02_s04\" class=\"section\">\n<h2 class=\"title editable block\">Brokerage Orders<\/h2>\n<p id=\"fwk-134226-ch14_s02_s04_p01\" class=\"para editable block\">You need not be an expert in the arcane language brokers use to describe trades, so long as you understand the basic types of orders you can request. Say you want to buy a hundred shares of X Corporation\u2019s common stock. You call your broker and ask the price. The broker says that at this moment, the market is \u201c50 bid-50.25 ask.\u201d Stock exchanges are auction markets; that is, buyers bid what they are willing to pay and sellers ask what they\u2019re willing to accept. If the market is \u201c50 bid-50.25 ask,\u201d this means that right now the consensus among buyers is that they are willing to pay $50 per share, while sellers are willing to accept $50.25. The \u201cbid-ask spread\u201d or difference is 25 cents.<\/p>\n<p id=\"fwk-134226-ch14_s02_s04_p02\" class=\"para editable block\">If you then place a <strong>market order<\/strong><a class=\"footnote\" title=\"An order to trade at the market price.\" id=\"return-footnote-389-13\" href=\"#footnote-389-13\" aria-label=\"Footnote 13\"><sup class=\"footnote\">[13]<\/sup><\/a> to buy a hundred shares, the order will be executed at the lowest asking price\u2014the least that the seller is willing to accept. In other words, you will pay $50.25 per share, the asking price, to buy the stock.<\/p>\n<p id=\"fwk-134226-ch14_s02_s04_p03\" class=\"para editable block\">You could also place a <strong>limit order<\/strong><a class=\"footnote\" title=\"A trading order to buy or sell a security at a specific price.[\/footnotes] to buy the shares when the price is lower, say $45 per share (or to sell when the price is higher, say $55), specifying how long the order is in effect. If the price goes down to $45 (or up to $55) within the period of time, then your limit order will be filled, and otherwise it will not.\nWhen you buy a security, you are said to have a long position[footnote]Ownership of securities; used in the strategy of \u201cgoing long,\u201d which involves buying a security so that if the price rises, its sale will create a gain.\" id=\"return-footnote-389-14\" href=\"#footnote-389-14\" aria-label=\"Footnote 14\"><sup class=\"footnote\">[14]<\/sup><\/a> in that security; you own it. You could close out your position by selling it. When you \u201cgo long\u201d in a security, you are expecting its value to rise, so that you can buy it for a lower price and then sell it for a higher price.<\/p>\n<p id=\"fwk-134226-ch14_s02_s04_p05\" class=\"para editable block\">Alternatively, you could create a <strong>short position<\/strong><a class=\"footnote\" title=\"Owing securities because of having borrowed them from a broker; used in the strategy of \u201cshorting,\u201d which involves borrowing and selling a security so that if the price falls, you can create a gain when the securities are repurchased to be returned.\" id=\"return-footnote-389-15\" href=\"#footnote-389-15\" aria-label=\"Footnote 15\"><sup class=\"footnote\">[15]<\/sup><\/a> in the security by borrowing it from your broker, selling it, and then buying it back and returning it to your broker at some specified point in the future. When you \u201cshort\u201d a security, you are expecting its value to decrease, so that you can sell it at a high price and then buy it back at a lower price.<\/p>\n<p id=\"fwk-134226-ch14_s02_s04_p06\" class=\"para editable block\">Other specialized kinds of orders include a <strong>stop-loss order<\/strong><a class=\"footnote\" title=\"An order to sell a security once its price has fallen below a specified price.\" id=\"return-footnote-389-16\" href=\"#footnote-389-16\" aria-label=\"Footnote 16\"><sup class=\"footnote\">[16]<\/sup><\/a>, where you direct that the stock be sold when it reaches a certain price (below the current price) in order to limit your potential loss if the value decreases. You can use a <strong>stop-buy order<\/strong><a class=\"footnote\" title=\"An order to buy a security once its price has risen above a specified price.\" id=\"return-footnote-389-17\" href=\"#footnote-389-17\" aria-label=\"Footnote 17\"><sup class=\"footnote\">[17]<\/sup><\/a> to buy a stock at a certain price (above the current price) if you have \u201cshorted\u201d a security and want to limit your loss if its value rises.<\/p>\n<p id=\"fwk-134226-ch14_s02_s04_p07\" class=\"para editable block\">If you are following a \u201cbuy-and-hold\u201d strategy, you are establishing positions that you plan to hold for a long time. With this strategy you probably will do well to use a market order. Over the long term that you hold your position, the daily fluctuations in price won\u2019t matter.<\/p>\n<div id=\"fwk-134226-ch14_s02_s04_n01\" class=\"key_takeaways editable block\">\n<div class=\"textbox key-takeaways\">\n<h3 class=\"title\">Key Takeaways<\/h3>\n<ul id=\"fwk-134226-ch14_s02_s04_l01\" class=\"itemizedlist\">\n<li>A broker trades on behalf of clients; a dealer trades for its own account, and a broker-dealer does both.<\/li>\n<li>Brokers, dealers, and broker-dealers may be independent firms or subsidiaries of investment banks, commercial banks, or investment companies.<\/li>\n<li>\n<p class=\"para\">Firms may offer several levels of brokerage services, defining their roles as active manager, advisor, and\/or traders:<\/p>\n<ul id=\"fwk-134226-ch14_s02_s04_l02\" class=\"itemizedlist\">\n<li>discretionary trading,<\/li>\n<li>advisory dealing,<\/li>\n<li>execution only.<\/li>\n<\/ul>\n<\/li>\n<li>\n<p class=\"para\">Brokerage fees are based on the level of service provided and may consist of<\/p>\n<ul id=\"fwk-134226-ch14_s02_s04_l03\" class=\"itemizedlist\">\n<li>commissions on trading,<\/li>\n<li>advisory fees based on portfolio value, or<\/li>\n<li>a flat fee for management.<\/li>\n<\/ul>\n<\/li>\n<li>\n<p class=\"para\">Brokerage accounts may be<\/p>\n<ul id=\"fwk-134226-ch14_s02_s04_l04\" class=\"itemizedlist\">\n<li>cash accounts,<\/li>\n<li>margin accounts, or<\/li>\n<li>custodial accounts.<\/li>\n<\/ul>\n<\/li>\n<li>\n<p class=\"para\">Trading orders allow you to better execute a specific trading strategy:<\/p>\n<ul id=\"fwk-134226-ch14_s02_s04_l05\" class=\"itemizedlist\">\n<li>market orders,<\/li>\n<li>limit orders,<\/li>\n<li>stop-loss orders, or<\/li>\n<li>stop-buy orders.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<div id=\"fwk-134226-ch14_s02_s04_n02\" class=\"exercises editable block\">\n<h3 class=\"title\">Exercises<\/h3>\n<ol id=\"fwk-134226-ch14_s02_s04_l06\" class=\"orderedlist\">\n<li>Read the information at the following sites about choosing an investment broker or brokerage firm: <a class=\"link\" href=\"http:\/\/beginnersinvest.about.com\/od\/choosingabroker\/a\/brokeraccount.htm\" target=\"_blank\" rel=\"noopener\">http:\/\/beginnersinvest.about.com\/od\/choosingabroker\/a\/brokeraccount.htm<\/a> and <a class=\"link\" href=\"http:\/\/www.msmoney.com\/mm\/investing\/inv_experts\/brokerage_firms.htm\" target=\"_blank\" rel=\"noopener\">http:\/\/www.msmoney.com\/mm\/investing\/inv_experts\/brokerage_firms.htm<\/a>. In My Notes or your personal finance journal, record the top ten questions about a broker or brokerage that will guide your choice. What answers will you be looking for? See how the investment industry evaluates brokers at <a class=\"link\" href=\"http:\/\/www.smartmoney.com\/investing\/economy\/smartmoneys-annual-broker-survey-23119\" target=\"_blank\" rel=\"noopener\">http:\/\/www.smartmoney.com\/investing\/economy\/smartmoneys-annual-broker-survey-23119<\/a> and <a class=\"link\" href=\"http:\/\/www.moneybluebook.com\/reviews-of-the-best-online-discount-brokers\" target=\"_blank\" rel=\"noopener\">http:\/\/www.moneybluebook.com\/reviews-of-the-best-online-discount-brokers<\/a>.<\/li>\n<li>What information (or inspiration) useful for personal finance can you get at Money Blue Book (<a class=\"link\" href=\"http:\/\/www.moneybluebook.com\" target=\"_blank\" rel=\"noopener\">http:\/\/www.moneybluebook.com<\/a>)? How would you evaluate the Money Blue Book Web site as a source of financial news, information, and advice? In your opinion, how do sites such as Money Chimp (<a class=\"link\" href=\"http:\/\/www.moneychimp.com\/\" target=\"_blank\" rel=\"noopener\">http:\/\/www.moneychimp.com\/<\/a>), Cool Investing (<a class=\"link\" href=\"http:\/\/www.coolinvesting.com\/\" target=\"_blank\" rel=\"noopener\">http:\/\/www.coolinvesting.com\/<\/a>), and Get Rich Slowly (<a class=\"link\" href=\"http:\/\/www.getrichslowly.org\/blog\/\" target=\"_blank\" rel=\"noopener\">http:\/\/www.getrichslowly.org\/blog\/<\/a>) compare?<\/li>\n<li>\n<p class=\"para\">At the following Web sites, survey the argots, or \u201csecret\u201d vocabularies, that brokers use to discuss trades. From each glossary select five words relevant to you and their definitions to record in your personal finance journal or My Notes.<\/p>\n<ul class=\"itemizedlist\">\n<li style=\"list-style-type: none\">\n<ul class=\"itemizedlist\">\n<li>Stock Trading: <a class=\"link\" href=\"http:\/\/www.mytradingsystem.net\/Glossary-trading-terms.html\" target=\"_blank\" rel=\"noopener\">http:\/\/www.mytradingsystem.net\/Glossary-trading-terms.html<\/a><\/li>\n<li>Bond Trading: <a class=\"link\" href=\"http:\/\/www.bondsonline.com\/asp\/trading\/glossary.asp\" target=\"_blank\" rel=\"noopener\">http:\/\/www.bondsonline.com\/asp\/trading\/glossary.asp<\/a><\/li>\n<li>Futures Trading: <a class=\"link\" href=\"http:\/\/www.webtrading.com\/glossary.htm\" target=\"_blank\" rel=\"noopener\">http:\/\/www.webtrading.com\/glossary.htm<\/a><\/li>\n<li>Currency Trading (Foreign Exchange, or FOREX): <a class=\"link\" href=\"http:\/\/www.fxwords.com\" target=\"_blank\" rel=\"noopener\">http:\/\/www.fxwords.com<\/a><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-389\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Shared previously<\/div><ul class=\"citation-list\"><li>Personal Finance. <strong>Provided by<\/strong>: Saylor Academy. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/saylordotorg.github.io\/text_personal-finance\">https:\/\/saylordotorg.github.io\/text_personal-finance<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by-nc-sa\/4.0\/\">CC BY-NC-SA: Attribution-NonCommercial-ShareAlike<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section><hr class=\"before-footnotes clear\" \/><div class=\"footnotes\"><ol><li id=\"footnote-389-1\">An intermediary that acts as an agent for buyers or sellers to arrange a trade. <a href=\"#return-footnote-389-1\" class=\"return-footnote\" aria-label=\"Return to footnote 1\">&crarr;<\/a><\/li><li id=\"footnote-389-2\">A professional investor trading for its own account. <a href=\"#return-footnote-389-2\" class=\"return-footnote\" aria-label=\"Return to footnote 2\">&crarr;<\/a><\/li><li id=\"footnote-389-3\">An intermediary that acts as an agent for buyers or sellers and also trades for its own account. <a href=\"#return-footnote-389-3\" class=\"return-footnote\" aria-label=\"Return to footnote 3\">&crarr;<\/a><\/li><li id=\"footnote-389-4\">An investor-broker relationship where the broker is empowered to make investment decisions and trades on behalf of the client. <a href=\"#return-footnote-389-4\" class=\"return-footnote\" aria-label=\"Return to footnote 4\">&crarr;<\/a><\/li><li id=\"footnote-389-5\">An investor-broker relationship where the broker provides advice and guidance to the client, but investment decisions remain the client\u2019s. <a href=\"#return-footnote-389-5\" class=\"return-footnote\" aria-label=\"Return to footnote 5\">&crarr;<\/a><\/li><li id=\"footnote-389-6\">An investor-broker relationship where the broker\u2019s only role is to execute trades per the investor\u2019s decisions. <a href=\"#return-footnote-389-6\" class=\"return-footnote\" aria-label=\"Return to footnote 6\">&crarr;<\/a><\/li><li id=\"footnote-389-7\">A broker practice of executing trades for a client\u2019s account solely to create commissions for the broker. <a href=\"#return-footnote-389-7\" class=\"return-footnote\" aria-label=\"Return to footnote 7\">&crarr;<\/a><\/li><li id=\"footnote-389-8\">A brokerage account where investments are paid for from money on deposit. <a href=\"#return-footnote-389-8\" class=\"return-footnote\" aria-label=\"Return to footnote 8\">&crarr;<\/a><\/li><li id=\"footnote-389-9\">A brokerage account allowing the investor to purchase securities with funds borrowed from the broker. <a href=\"#return-footnote-389-9\" class=\"return-footnote\" aria-label=\"Return to footnote 9\">&crarr;<\/a><\/li><li id=\"footnote-389-10\">The requirement that an investor invest more capital to maintain the margin requirement, or the investor\u2019s equity in the investment. <a href=\"#return-footnote-389-10\" class=\"return-footnote\" aria-label=\"Return to footnote 10\">&crarr;<\/a><\/li><li id=\"footnote-389-11\">The percentage of security value that must represent capital from the investor (as opposed to money borrowed from the broker). <a href=\"#return-footnote-389-11\" class=\"return-footnote\" aria-label=\"Return to footnote 11\">&crarr;<\/a><\/li><li id=\"footnote-389-12\">A brokerage account for a minor, established with a guardian (adult) who is authorized to make trading decisions. <a href=\"#return-footnote-389-12\" class=\"return-footnote\" aria-label=\"Return to footnote 12\">&crarr;<\/a><\/li><li id=\"footnote-389-13\">An order to trade at the market price. <a href=\"#return-footnote-389-13\" class=\"return-footnote\" aria-label=\"Return to footnote 13\">&crarr;<\/a><\/li><li id=\"footnote-389-14\">A trading order to buy or sell a security at a specific price.[\/footnotes] to buy the shares when the price is lower, say $45 per share (or to sell when the price is higher, say $55), specifying how long the order is in effect. If the price goes down to $45 (or up to $55) within the period of time, then your limit order will be filled, and otherwise it will not.<\/p>\r\n<p id=\"fwk-134226-ch14_s02_s04_p04\" class=\"para editable block\">When you buy a security, you are said to have a <strong>long position<\/strong>[footnote]Ownership of securities; used in the strategy of \u201cgoing long,\u201d which involves buying a security so that if the price rises, its sale will create a gain. <a href=\"#return-footnote-389-14\" class=\"return-footnote\" aria-label=\"Return to footnote 14\">&crarr;<\/a><\/li><li id=\"footnote-389-15\">Owing securities because of having borrowed them from a broker; used in the strategy of \u201cshorting,\u201d which involves borrowing and selling a security so that if the price falls, you can create a gain when the securities are repurchased to be returned. <a href=\"#return-footnote-389-15\" class=\"return-footnote\" aria-label=\"Return to footnote 15\">&crarr;<\/a><\/li><li id=\"footnote-389-16\">An order to sell a security once its price has fallen below a specified price. <a href=\"#return-footnote-389-16\" class=\"return-footnote\" aria-label=\"Return to footnote 16\">&crarr;<\/a><\/li><li id=\"footnote-389-17\">An order to buy a security once its price has risen above a specified price. <a href=\"#return-footnote-389-17\" class=\"return-footnote\" aria-label=\"Return to footnote 17\">&crarr;<\/a><\/li><\/ol><\/div>","protected":false},"author":44985,"menu_order":2,"template":"","meta":{"_candela_citation":"[{\"type\":\"cc\",\"description\":\"Personal Finance\",\"author\":\"\",\"organization\":\"Saylor Academy\",\"url\":\"https:\/\/saylordotorg.github.io\/text_personal-finance\",\"project\":\"\",\"license\":\"cc-by-nc-sa\",\"license_terms\":\"\"}]","CANDELA_OUTCOMES_GUID":"","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-389","chapter","type-chapter","status-publish","hentry"],"part":377,"_links":{"self":[{"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/pressbooks\/v2\/chapters\/389","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/wp\/v2\/users\/44985"}],"version-history":[{"count":2,"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/pressbooks\/v2\/chapters\/389\/revisions"}],"predecessor-version":[{"id":589,"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/pressbooks\/v2\/chapters\/389\/revisions\/589"}],"part":[{"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/pressbooks\/v2\/parts\/377"}],"metadata":[{"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/pressbooks\/v2\/chapters\/389\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/wp\/v2\/media?parent=389"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/pressbooks\/v2\/chapter-type?post=389"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/wp\/v2\/contributor?post=389"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/courses.lumenlearning.com\/suny-personalfinance\/wp-json\/wp\/v2\/license?post=389"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}