A finished FIN-375 Topic 1 trade execution walkthrough example, following a market, a limit and a margin order through one stock and pricing what each costs the investor. Searches like "fin 375 topic 1 assignment example", "fin375 topic 1 sample" and "fin-375 topic 1 example" land here.
What a finished FIN-375 Topic 1 trade execution walkthrough looks like
The finished walkthrough uses one illustrative stock quoted at 49.95 bid and 50.05 ask. A market order for 200 shares fills at the ask, 10,010, and selling back at the bid would return 9,990, so the 20 gap is the price of immediacy. A limit order to buy at 49.98 costs less if it fills and may not fill at all. The margin purchase buys 400 shares at 50 with half borrowed: 10,000 of the investor's money, 10,000 from the broker. A 10 percent rise to 55 lifts the investor's equity 20 percent, and a 10 percent fall to 45 cuts it 20 percent, before interest. Under a 30 percent maintenance margin, a fall to about 35.71 triggers a margin call. A closing line separates the primary market, where the firm raised its money, from these secondary trades.
How a FIN-375 Topic 1 example is structured
The walkthrough is organized by order, each followed from placement to fill. It begins by locating the trades: shares already issued, changing hands between investors on an exchange, with the issuing firm receiving nothing. A short passage explains who posts the bid and the ask and why they differ. The market order section computes the fill and the cost of an immediate round trip. The limit order section sets out the trade between price and certainty of execution, noting what happens when the price moves away. The margin section tables the purchase, the investor's equity at three prices and the price at which the broker calls for more money. A short-sale paragraph notes that a borrowed share sold short carries a loss with no ceiling. The final section sorts market features into those that cost the investor and those that protect the investor.
Secondary trades, not new capital
Every order in the example moves existing shares between investors, and the walkthrough notes that the issuing firm raised its money once, in the primary market.
The spread priced for 200 shares
Buying at the ask and selling at the bid would cost 20 on an immediate round trip, the price of trading now rather than waiting for a better quote.
A limit order's two outcomes
The buy at 49.98 either saves money or never executes, and the example states both outcomes instead of presenting the limit order as simply cheaper.
Leverage cutting in both directions
With half the purchase borrowed, a 10 percent price move becomes a 20 percent change in the investor's equity, up or down, before any interest is charged.
The margin call price derived
Under a 30 percent maintenance requirement the call arrives near 35.71, a price the example works out from the loan balance rather than asserting.
Where marks go in FIN-375 Topic 1
Walkthroughs that define order types without pricing any of them come off worst, since market organization matters here only through what it costs the person trading, and definitions never reach a cost. Treating the quoted price as the price paid ignores the spread, which is small on one trade and large across many. Papers that call a limit order cheaper without noting it may never fill have described half the trade. Margin examples that report the gain on a rising price and skip the matching loss misstate leverage, and leaving out interest on the borrowed half flatters both results. A margin call price asserted rather than derived from the loan and the maintenance requirement cannot be checked. Confusing primary and secondary markets, as though every share purchase funds the company, misreads where the firm's money came from.
Get a FIN-375 Topic 1 example written to your instructions
Send the FIN-375 Topic 1 instructions and the rubric from your classroom, with any quotes, order scenarios or readings your section assigns. We write a custom example to them, with each order followed to its fill, the spread priced, leverage shown in both directions and the margin call price derived, in 24 to 48 hours. The first one is free.
FIN-375 Topic 1 questions, answered
Why does the example charge the investor for the spread?
Because a trader who wants to buy now pays the ask and one who wants to sell now receives the bid, and the difference goes to whoever provides that immediacy. On 200 shares with a 0.10 spread, an immediate round trip costs 20. Spreads are narrow on heavily traded stocks and wider on thinly traded ones, and that difference is a real part of trading cost.
What does a maintenance margin requirement do?
It sets the minimum share of the account's value that must be the investor's own equity. When a falling price pushes equity below that share, the broker issues a margin call, and the investor must add money or securities or have positions sold. In the example the requirement is 30 percent, a case figure; regulators set minimums, and brokers may set their own requirements higher.
Is the walkthrough advice about trading on margin?
No. The stock, prices and margin terms are illustrative, and the example exists to show how FIN-375 expects market mechanics to be priced. Borrowing to invest magnifies losses as well as gains, and real margin accounts carry interest, broker rules and risks the example only outlines. Decisions about your own trading belong with you and, where needed, a licensed professional familiar with your finances.