Q&A by Don Bright
ANSWERING SOME BASIC QUESTIONS
I recently opened an account with an online broker but have had a hard time getting any answers to some basic questions. I was hoping that you could help me. My questions are very basic, but I cannot get a few things straight:
1. The online brokers refer to marginable securities, but what does that mean for me? I was warned about the margin involved when buying a stock at about $3.00. What difference does it make?
2. When I asked about selling stocks short, they wanted me to read several pages of hard-to-understand information they provided. I thought selling short was like betting on a downward move. And again, there was that warning about $3.00 stock.
3. They told me about something called “interest differential” — and that I should be concerned about it. I don’t know what that means.
4. And finally, they referred to something called mark to market. I’ve heard that term as it relates to houses and stuff. Is this a tax consideration?